Indian defence procurement policy overhauled

10 Jan 2011

Source:  LiveMint
The Indian ministry of defence (MoD) has overhauled its procurement policy with an accent on supporting indigenous companies to facilitate the development of domestic capability, particularly in shipbuilding.

The revised policy, posted on the ministry’s website and which came into effect in January 2011, also enhances the scope of offsets that will allow foreign defence vendors to include civil aerospace, and internal security equipment and training services to meet obligations for encouraging domestic companies.

Under its procurement policy or the defence procurement procedure (DPP), India imposes counter-trade obligations on original equipment manufacturers who are awarded defence contracts worth more than Rs.300 crore by way of transfer of critical technologies and production of components in India. For this purpose, the foreign defence vendor partners with an Indian company; at present the offset obligation is 30-50%.

The revised DPP governs the capital procurement procedure for defence equipment and supersedes DPP 2008.
The major change in the shipbuilding procedure is that the policy has divided procurement into two different sections, one for defence public sector unit (DPSU) shipyards and another for private shipyards. DPSU shipyards will be given shipbuilding contracts on a nominated basis while private shipyards will have to participate through competitive bidding.

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