Bigger role for industry in defence sector

In the next two months, the Defence Ministry is expected to finalise key long-pending measures aimed at providing Indian industry a level-playing field in the defence manufacturing sector and give impetus to the Make in India initiative.

Defence Minister Manohar Parrikar had recently said during industry interactions that the crucial chapter on strategic partnerships as well as revision of the Defence Procurement Manual (DPM) and the Ordnance Factory Board (OFB) procurement manual are expected to be finalised in the next two months.

“Strategic partnership is a chapter where radical transformation is proposed. We are close to it. Probably September should be a reasonable time for it to come,” Mr. Parrikar had said.

A new concept of “strategic partners” has been proposed under the new Defence Procurement Procedure (DPP) 2016, which came into effect in April, to be incorporated as a separate chapter to promote indigenisation in key military platforms as part of the Make in India initiative.

The Defence Ministry had earlier appointed two committees headed by former Home Secretary Dhirendra Singh and former DRDO Chief V.K. Atre, who had proposed a methodology for selecting the strategic partner. But there was opposition from the industry to some of the proposals. Observing that there were certain crucial differences in viewpoints, Mr. Parrikar said this issue required a step-by-step approach in order to drastically change the system and added that “it has to be laid out in the chapter itself.”

Role of MSMEs

While the “strategic partners” are meant for big corporates, efforts are on to provide a level playing field to the Micro, Small & Medium Enterprises (MSME) which hold significant technology but do not have the means to compete in this deeply regulated sector.

Mr. Parrikar noted that for the new DPP to make impact, under which new proposals would probably start flowing in the next 2-3 months, there was also a need to amend the DPM which was last amended in 2009. “Immediately after the DPM, within 30-60 days, was the OFB procurement policy which was almost ready. The MSMEs are major suppliers to the OFB and Defence Public Sector Undertakings and the revision of the DPM and the OFB procurement policy was expected to address most of the issues that industry faced.

Boosting exports

With particular focus on increasing defence exports, the Ministry has granted “specific permission” to the OFB and the DPSUs to export 10 per cent of all items without specific approval. “If they manage to do that they can revamp their production next year so the armed forces are not deprived of their quantity,” Mr. Parrikar stated.

The Ministry is also in the process of creating a platform for promoting Indian defence products abroad through our missions and Defence Attaches. Based on the initial experience in pushing up exports, a detailed export policy would be formulated next year.

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Printable version | May 16, 2021 2:29:19 AM |

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