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Defence Procurement Procedure 2020

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Defence Procurement Procedure 2020

What to study?

For Prelims: Overview of DPP, key changes introduced.

For Mains: Significance of revised DPP.

Context: Raksha Mantri Shri Rajnath Singh unveils draft of Defence Procurement Procedure 2020.

It aims at further increasing indigenous manufacturing and reducing timelines for procurement of defence equipment.

Key highlights of the draft:

  1. Indigenous Content (IC) stipulated in various categories of procurement has been increased by about 10% to support the ‘Make in India’ initiative.
  2. Leasing has been introduced as a new category for acquisition in addition to existing ‘Buy’ & ‘Make’ categories to substitute huge initial capital outlays with periodical rental payments. Here, the lessor can be both Indian as well as global.
  3. New Category Buy (Global – Manufacture in India) has been introduced with minimum 50% indigenous content on cost basis of total contract value.
  4. There is also long-term product support — which would be three to five years after the warranty period is over.
  5. A “price variation clause” has been introduced that will be applicable to all cases where the total cost of contract is more than Rs 1,000 crore and the delivery schedule exceeds 60 months.

Background:

The first DPP was promulgated in 2002 and has since been revised a number of times to provide impetus to the growing domestic industry and achieve enhanced self-reliance in defence manufacturing.

What is DPP?

The Defence Procurement Procedure mainly contains processes that needs to be followed to streamline and simplify defence procurement procedures and ultimately achieve the objective of self reliance in meeting all the security needs of the Indian Armed Forces by promoting indigenous design, development and manufacture of Defence weapon systems and, platforms in a time-bound manner without any delays.

Insta Link:

Prelims Link:

  1. New clauses and incentives announced.
  2. DAC- head and functions.
  3. DPP 2002 vs Draft DPP 2020- key changes.

Mains Link:

Discuss the significance and key features of the Draft Defence Procurement Procedure.

Sources: pib.