India Releases New Defense Procurement Procedure

India Releases New Defense Procurement Procedure

India’s Minister for Defense, Manohar Parrikar released the latest Defense Procurement Procedure (DPP) which seeks to simplify and speed-up defense purchases. Parrikar said the new policy “will boost the Make in India initiative, and will come in to effect from April 1.”

Manohar Parrikar

(DPP) 2016 is geared toward partnership with Indian defense companies and not just purchase of weapons. It seeks to give top priority to a new category of procurement known as Indigenous Design, Development and Manufacturing (IDDM). Products bought under this category would require 40 percent domestic content if the design of the product is also domestic; else, it will require 60 percent domestic content, reports Defense News.

The priority to acquiring weapons will be given in the following order:

  • Buy (Indian — IDDM)
  • Buy (Indian)
  • Buy and Make (Indian)
  • Buy and Make (Global)
  • Buy (Global) category

In another change, foreign companies will now have to transfer technology for providing maintenance infrastructure, even under the category Buy (Global).

The new DPP has increased the bar for fulfilling mandatory defense offsets by overseas companies. Now, mandatory offsets will be discharged by overseas defense companies only when the contract is over $296 million compared to the existing level of $45 million — a relief to overseas defense companies.

Talking to reporters, Parrikar said the policy to allow private-sector defense companies as strategic partners for big ticket defense projects is likely to be cleared by the government in the next three months.


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