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Defense Manufacturing Rules Eased

  • 07 Jan 2019
  • 4 min read

The government has simplified the approval process for the manufacturing of defense and aerospace equipment and components by private industry.

  • The government has brought the equipment under the licensing authority of the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry
  • The Equipment is listed in three categories — defense aircraft, warships of all kinds, and allied items of defense equipment.
  • Defense items are covered by two different Acts — the Industries (Development and Regulation) Act, 1951, (IDRA act)and the Arms Act, 1959.
  • Items of defense aerospace and warships now do not require a license under Arms Act. Such items shall now be covered by IDRA act.

Significance

  • The most significant aspect is that warships of all kinds, surface and sub-surface, have been included in the listing.
  • This move is also expected to help foreign Original Equipment Manufacturers (OEM) looking for partnerships with the private sector.
  • The new guidelines would give a boost to the small and medium enterprises (SMEs).

Defense Procurement Procedure

  • The government has appointed Dhirendra Singh Committee in May 2015 to review the Defense Procurement Procedure (DPP), 2013.
  • Based on the recommendations of the committee Defence Procurement Procedure (DPP-2016) was brought which replaced the DPP-2013.
  • DPP, 2016 focuses to boost the Make-in-India initiative by promoting indigenous design, development, and manufacturing of defense equipment, platforms, and systems.
  • The government has introduced a newly incorporated procurement class called “Buy Indian (IDDM)”, where IDDM stands for Indigenous Designed Developed and Manufactured. This would have the first preference in all acquisitions once the DPP comes into effect.
  • Besides this, preference has been accorded to ‘Buy (Indian)’ and ‘Buy and Make (Indian)’ categories of capital acquisition over ‘Buy (Global)’ & ‘Buy & Make (Global)’ categories.

Special Partnership Model under the Defense Procurement Procedure

  • Ministry of Defence has formulated the Strategic Partnership (SP) model under the Defence Procurement Procedure (DPP), covering four specific areas to promote the role of the private sector in defense manufacturing.
  • The Strategic Partnership Model (SPM) is a different category in addition to the existing categories i.e. ‘Buy (Indian-IDDM)’; ‘Buy (Indian)’; ‘Buy & Make (Indian)’; ‘Buy & Make’ and ‘Buy (Global)’.
  • The policy is intended to institutionalize a transparent, objective and functional mechanism to encourage participation of the private sector, in manufacturing the defense equipment such as aircraft, submarines, helicopters, and armored vehicles.
  • The policy aims to enhance competition, increase efficiencies, facilitate faster absorption of technology, leading to the reduction in dependence on imports and greater self-reliance in defense manufacturing.
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