There is a need to formulate a composite policy that focuses on indigenisation in high priority technology areas, shedding the notion that it must necessarily result in savings. A more modest and focussed mission-mode approach to indigenisation can produce better results.
The Defence Acquisition Procedure (DAP 2020), which supersedes the Defence Procurement Procedure 2016 (DPP 2016), is a sincere effort by the Ministry of Defence to improve the capital procurement procedure.
The OCPP is a mix of revenue and capital procurement procedures, based on the Defence Procurement Manual 2006. It could have been an opportunity to lay down a more self-contained procedure.
Poor workmanship, deteriorating quality issues, and lack of professionalism have plagued the workings of the Ordnance Factories. There is an imperative need for modernising the workings of the OFs through corporatisation.
Raising the FDI limit by itself may not enthuse the foreign investors as per the expectations. To make the defence sector more attractive for foreign investment, a whole lot of other related issues will have to be addressed by the government.
It would be helpful if MoD issues a formal order addressing the concerns expressed by various stakeholders about certain aspects of the negative list, especially its impact on projects that involve foreign OEMs and the purpose of bifurcating the capital budget.
The negative list of embargoed defence items is one more step towards creating a strong domestic arms industry and making India self-reliant in defence production.
Banning the sale of imported items through the CSD could supplement the various domestic industry-friendly policy measures being taken by the government for a self-reliant India.
While the steps stipulated in draft DAP-2020 to enable smooth acquisition of systems indigenously designed by DRDO and other public sector entities are a right move, they need to be strengthened further to make procedures more robust and conducive for timely completion of projects.
Indigenisation – In Need of Policy Framework
There is a need to formulate a composite policy that focuses on indigenisation in high priority technology areas, shedding the notion that it must necessarily result in savings. A more modest and focussed mission-mode approach to indigenisation can produce better results.