DPP-2009 to Boost Technology Transfer to Indian Industry

By on Wednesday, October 28th, 2009

In a move that has the potential to revolutionize the Indian Defence Industry, the Ministry of Defence is adding a new provision in its procurement procedure which will allow issue of Request For Proposal (RFP) to Indian industries having requisite financial and technical capabilities to absorb technology and undertake indigenous manufacture under a new category ‘Buy and Make (Indian)’.

Under the current procedure in ‘Buy and Make’ cases RFP is issued only to foreign vendors, who are required to transfer technology to Indian Defence Industry, called Production Agency. This does not promote setting up of Joint Ventures or Co-production arrangements in India by big foreign Original Equipment Manufacturers (OEMs).

The new procedure, to be effective from November 01, 2009 will be akin to the existing ‘Make Procedure’ with a vital difference that the production and development by Indian industry will be through transfer of technology and not through Research and Development.

Announcing this at a National Seminar on Defence Acquisition, organized by the Institute for Defence Studies and Analyses here today, the Defence Minister Shri AK Antony said the move is primarily aimed at encouraging pro-active participation by the Indian industry who could establish JV/Production arrangements with any foreign manufacturer. The needs of the Services will be shared with capable Indian firms who in turn would submit a roadmap for development and production of a particular item over its life-cycle.

Shri Antony said the twin objectives of DPP-2009 aim at promoting and facilitating wide participation of Defence Industry, while enabling transparency and integrity in all acquisitions.

The Defence Minister said to ensure transparency and enhanced awareness in the Indian industry, the Government will prepare a public version of the fifteen years Long Term Acquisition Plan of the Armed Forces. This will be placed on the MoD website and shared with industry associations to create requisite awareness amongst them.

“This would help Indian Industry to work out the technological requirements and build in-house capabilities in order to meet the future defence requirements. I am sure that the industry will respond positively to this proposal”, he said.

Another important feature of DPP-2009 would be mandatory issue of Request for Information (RFI) on the MoD website in all acquisition cases. To enable participation of industry in Defence Acquisition Planning, the Ministry will henceforth invite their representatives for consultations and presentations in high-level procurement meetings before a decision is taken on the source and methodology for procurement of Defence weapons and equipment.

Further, to enhance probity in Defence procurement deals, DPP-2009 proposes to enhance the role of Independent Monitors, to scrutinize complaints with regard to violations of Integrity Pact which prohibits corruption in Defence deals.

In order to facilitate discharge of Offset obligations, an enabling clause has also been incorporated to permit change of offset partners in exceptional cases. The Offset provisions for the option clause has been amplified to state that the Offsets will not be applicable in cases where the same was not included in the original contract. Shri Antony expressed the hope that these changes will bring in greater degree of probity in the procedure and also encourage domestic defence industry to develop.

Shri Antony asked Defence personnel to ensure that the Qualitative Requirements (QRs) formulation is done in a manner that fulfils the end user’s basic requirements while at the same time it should encourage the widest possible competition. “It is only through competition that we can ensure the maximum value for our money. It is important to have broad-based and realistic QRs that would lead to multivendor competition”, he said. Noting that the occasional changes in QRs by the Services also led to delays in Defence Acquisitions, Shri Antony said that acquisitions once approved by the Defence Acquisition Council (DAC), changes to RFP and QRs should be avoided and exercised only exceptionally.

Referring to the technical and commercial aspects of evaluation, Shri Antony said we need to ensure these vital stages are completed not only in a fair, objective and transparent manner, but within the stipulated time frame.

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