Defence procurement policy to be delayed

The much-awaited defence procurement policy is unlikely to be announced in 2015, extending the wait for the industry, which has been encouraged by the NDA government to enter the defence manufacturing space.

The delay is because of a key ministerial panel’s inability to submit its report in time on how to pick a particular company as a strategic partner for manufacturing important military hardware like aircraft, warships, submarines, armoured vehicles, electronics and materials.

The panel, headed by former Defence Research and Development Organisation (DRDO) director general V K Aatre, is to suggest the parameters for identifying a particular company for a specific project.

Set up in September, the panel was to submit its report within three weeks. But it has not done it so far and may take some more time, Defence Ministry sources said.

On Monday, Defence Minister Manohar Parrikar said the defence procurement policy was in the final stages of finalisation. The DPP document will have a special focus on Make in India, under which the aim is to have 40 per cent of defence procurement under “Make in India” initiative from the current 30 per cent and raising it to 70 per cent indigenisation in the next five years. Parrikar said, “The last 10 years have seen that procedure has become more important than the target. The target is to provide modern equipment to the armed forces in a timely manner. The ministry I inherited was full of mistrust but the situation has changed to a large extent.”

Formation of the Aatre panel was necessitated by the recommendations of the Dhirendra Singh Committee that suggested important changes to DPP-2013 to make it more industry friendly for ushering in the Make in India scheme for defence manufacturing.

The NDA government opened up the defence sector for the private industry within months of coming to the power almost 18 months ago.

One of the important recommendations was to deviate from the defence public sector units and ordnance factory board route to create a defence manufacturing base in the private sector, which would be chosen as strategic partner. The Aatre panel would suggest the selection criterion.

Several parliament members asked Parrikar to let defence PSUs remain in the competition. Along with DPP, the Defence Procurement Manual is under the process of internal vetting and is expected to be finalised by end of June, 2016.