The Defence Procurement Policy 2016

What is Defence Procurement Policy?
The DPP is the governing manual for all defence procurement.

Q A
What is Defence Procurement Policy?
  • The DPP is the governing manual for all defence procurement.
  • It was a part of a set of military reforms undertaken to address the many deficiencies noticed during the 1999 Kargil war.
  • Since the first one in 2002, the DPP has been revised periodically.
What is DPP-2016?
  • It was released last week and It replaces the last DPP unveiled in 2013
What are its key features?
  • The new policy places the highest preference to a newly incorporated procurement class called ‘Buy Indian-IDDM’, with IDDM denoting Indigenous Designed Developed and Manufactured. This category refers to procurement from an Indian vendor, products that are indigenously designed, developed and manufactured with a minimum of 40 per cent local content, or products having 60 per cent indigenous content if not designed and developed within the country.
  • The policy has also liberalised the threshold for offset liabilities for foreign vendors — now the obligation to invest at least 30 per cent of the contract value in India will kick in at Rs.2,000 crore, a significant increase from the previous Rs.300-crore mark.
  • The policy lays stress on micro, small and medium enterprises (MSMEs), and on “Make in India”. A 10 per cent weightage has been introduced for superior technology, instead of selecting the lowest bidder only in financial terms.
What is its significance?
  •  The policy is a step forward in increasing the participation of India’s private sector in military manufacturing.
Why this policy has been criticised by some?
  • DPP 2016, however, falls far short of the expectations raised by the “Make in India” push that aims to transform the country into a global manufacturing hub.
  • The DPP is noticeable for the absence of Chapter VII, titled ‘Strategic Partners and Partnerships’, which the Defence Minister said would be notified separately. Under Strategic Partnerships, select Indian private companies were to be given preferential status in major defence projects.
  • The inability of the Centre to finalise a credible policy to radically increase indigenous military manufacturing is a sure sign that India will remain heavily dependent on defence imports.

WORD FROM TEAM GS-SCORE –

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For further detail Refer article titled “Towards military self-reliance” from The Hindu dated march 30, 2016

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