Defence Procurement Policy

Defence Procurement Procedure (DPP) 2016 focuses on institutionalizing, streamlining and simplifying defence procurement procedure to give a boost to “Make in India” initiative of the Government of India, by promoting indigenous design, development and manufacturing of defence equipment, platforms, systems and sub-systems.

• Several initiatives have been taken to promote greater participation of industry which includes revision in Defence Procurement Procedures to introduce ‘Make-I’ and ‘Make-II’ processes, introduction of Strategic Partnership Model, increase in FDI through automatic route to 49%, restricting licensing requirements for critical items, de-notifying several items previously produced only by OFBs for production by industry etc.

Objectives

• Create an environment that encourages a dynamic, robust and competitive defence industry as part of the ‘Make in India’ initiative.
• To facilitate faster absorption of technology and create a tiered defence industrial ecosystem in the country.
• To reduce current dependence on imports and to achieve self-reliance in development and manufacture of weapon systems (like Autonomous Weapon Systems, electronic warfare systems, missile systems etc.) by 2025.
• To achieve defence turnover and exports of nearly Rs 1,70,000 Crores (USD 26 billionapprox.) and Rs 35,000 Crores (USD 05 Billion approx.) respectively in defence goods and services by 2025.
• To turn India into a global leader in Robotics, Cyberspace and AI technologies.

Salient Features

• A new category of procurement ‘Buy {Indian-IDDM (Indigenously Designed, Developed and manufactured)}’ has been introduced in Defence Procurement Procedure and has been accorded the top most priority for procurement of capital equipment.
• Preference has been accorded to ‘Buy (Indian)’ and ‘Buy and Make (Indian)’ categories of capital acquisition over ‘Buy (Global)’ & ‘Buy & Make (Global)’ categories.
• Requirement of Indigenous content has been enhanced / rationalized for various categories of capital acquisition.

Strategies

• Fostering a competitive, innovative and robust defence industry.
• Encouraging collaborations to acquire latest technology, manufacturing processes, skill-sets and R&D.
• Providing a boost to MSMEs and Start-ups.
• Strengthening infrastructure, including QA/QC/testing labs, both within public and private sector.
• Enabling ease of doing business and also enhancing defence exports.