Indian MoD Approves Changes in Offsets, Stresses On Local Production In New Defense Policy

  • Our Bureau
  • 02:37 PM, January 12, 2016
  • 4027

India’s Defense Acquisition Council (DAC) has approved major policy changes that include increased offset baseline, reduced delays in procedures and emphasis on local production.

The DAC has cleared the new clauses to the proposed Defense Procurement Policy (DPP) on Monday. Guidelines on foreign partnerships and blacklisting are deferred by two months.

The Defence Acquisition Council (DAC) on Monday cleared new clauses to the proposed Defence Procurement Policy (DPP).

According to the new DPP offsets obligations will be applicable in deals worth over 2,000 crore increased from the earlier benchmark of over INR 300 crore.

The new DPP lays emphasis on reducing the delays in procurements by eliminating repetitive procedures. Certain procurements will be allowed in case of single vendor situations with proper justification. Earlier no tender was issued if there was only a single vendor bidding for any project.

"The representative (or agent) should be paid a reasonable fee...he should not be a commission agent or be paid depending on the cost of a deal or the success or failure of the deal," Defense Minister Manohar Parrikar said.

The new DPP will also include guidelines for the government plan to enter into strategic partnerships with private sector companies in six critical areas, ranging from aircraft and warships to tanks and guided missile systems.

“The new category of Buy Indigenously Designed, Developed and Manufactured Equipment is ingenious. This changes everything. The impact will be far-reaching and will have cascading effect. This will change India from being a destination for low-cost manufacturing, to being a starting place for cutting-edge innovation; from being a consumer of out-dated equipment to being a producer of trail-blazing technology; from being the world’s largest importer to being a leader in export of defence equipment,” Ashok Atluri, Managing Director, Zen Technologies was quoted as saying by the Hindu news daily.

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