Govt looks at leasing military equipment

Defence procurement procedure to give incentives to foreign companies to manufacture in India

Tribune news Service

New Delhi, March 20

In major changes suggested to the defence procurement procedure (DPP), the Ministry of Defence wants to lease non-essential equipment, allow rapid update of software on projects, have more local content and give incentives to foreign companies to manufacture in India.

Launching the draft DPP today, Defence Minister Rajnath Singh sought responses till April 17. He said, “Our aim is to make India self-reliant and a global manufacturing hub.”

The draft proposes increasing the indigenous content (IC) stipulated in various categories of procurement by about 10 per cent to support ‘Make in India’ and incentivising the use of local raw materials and special alloys.

The new DPP also has a new category to allow minimum 50 per cent indigenous content on cost basis of the total contract value. Only the minimum necessary will be bought from abroad, the rest will be manufactured in India. This would be in preference to the ‘Buy Global’ category as manufacturing will happen in India and jobs will be created in the country.

The DPP proposes to allow leasing as a new category for acquisition in addition to existing ‘Buy’ and ‘Make’ categories to substitute huge initial capital outlays with periodical rental payments.

Leasing will be permitted under two categories – lease from Indian company which could be an Indian entity and also when the Global entity is leasing equipment. This will help in overcoming short-term needs without buying such equipment. This will be useful for military equipment not used in actual warfare like transport fleets, trainers, and simulators.

A new chapter is introduced for procurement of software and systems related projects, this will help overcome rapid changes in technology and allow flexibility in keeping up with the technology.