Indian Defence Procurement Policy Set To Boost Indigenous Industry

Indian Defence Ministry’s acquisition council gave approval to the significant changes in the Indian Defence Procurement Procedure (DPP)-2016 to make defence procurement easy and industry-friendly.

In a major change, the submission of bank guarantees from Indian private sector banks authorised by RBI in addition to all public sector banks has been approved. The Defence Ministry told that this move will cut overhead costs of seller incurred while obtaining these guarantees from banks and enable active financial transactions.

Another significant change is the simplification of the best price determination process in which the latest government policies on GST and customs duties have now been taken into consideration to decide the lowest bidder.

The move offers Indian vendors an advantage in terms of duty as compared to foreign bidders. The rules were last revised in May last year. The Defence Acquisition Council also approved managing the date of delivery with the date of advance payment instead of date of the contract.

“This entails that the seller has adequate mobilisation of funds available to him to commence production and ensure delivery on schedule,” the Ministry said.

Changes have also been made to simplify “unwieldy aspects” of the procedure such as devolution of approval and vetting of reports. “These measures are set to provide further impetus to the indigenous defence industry in the country as also encourage foreign industry to manufacture in India,” Ministry added.

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