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New Defence Procurement Policy results in dynamic changes

In an attempt to streamline defence acquisition and give a boost to the “Make in India” initiative, the government on Monday approved changes to the Defence Procurement Procedure (DPP). This will give Indian private companies a chance to locally produce equipment and invest in research and development (R&D).

At a meeting chaired by Defence Minister Manohar Parrikar on Monday evening, the Defence Acquisition Council (DAC), which is the supreme decision-making body for the Ministry of Defence, allowed changes to the DPP after a one-year review, The Tribune said.

“Recommendations of the expert committee headed by former Home Secretary Dhirendra Singh were considered and most of them were approved,” Parrikar was quoted as saying by The Hindu.

As per the changes, the procurement policy of 2016 will have a new category — an Indigenously Designed, Developed and Manufactured (IDDM) platform. Under this category, if the design is indigenous, it will be mandatory to have 40% local content, but if the design is not local, 60% content will be mandatory.

Another major change to the DPP is “small and medium-scale industries will get opportunities,” Parrikar said. However, two issues have to be addressed: “The method of blacklisting for firms” and the “requirements for guidelines to select the correct strategic partner for producing equipment in India”. The DPP offsets limit has been increased from Rs 300 crore to Rs 2,000 crore, The Tribune report said.

“Issue of Offsets is actually irrelevant since this was not working in any case. As I have been saying all along, Offsets even for projects in excess if 2000 crores will be of no use from a defense technology point of view,” said G Raj Narayan, Founder & Md of Radel Group.

India is currently the largest buyer of military equipment and weaponary, which accounts for 15% of all international imports, Stockholm International Peace Research Institute, a Sweden-based think tank said.

The original article appeared on IBTimes.

Skill set development for the A&D sector – An MSME perspective

This Plenary session on January 7, 2016, at the Indian Science Congress being held in Mysore, aims to focus on the Make In India initiative with particular reference to the Defence and Aerospace sector.

The ‘Make in India’ is a paradigm shift from the past two decades of Indian obsession with IT and ITeS services during which manufacturing industries were allowed to collapse. There appears to be a new found realization of the benefits of manufacturing A&D products in India for home consumption rather than import them. However, ‘Make in India’ goes beyond just manufacturing, to design, innovate, manufacture and support in India. Viewed holistically, this has profound implications across a wide section of businesses. It involves huge numbers of creative engineers, technicians, professors, research scholars, sales, marketing and support staff, etc. all of whom need to possess specialized skills.

MSMEs in India contribute more than 45% of the industrial output of the country and hence constitute a large section of the manufacturing chains of almost all products. ‘Make in India’ opens up far more opportunities of raising their value proposition than being mere vendors to the large DPSUs. MSMEs will now have to scale up their capabilities to design and manufacture parts, sub-assemblies as well as complete products. This requires a wide variety of skills.

Considering that less than 10% of the engineers churned out of Indian colleges are found to be employable in the core engineering industries, imparting practical skills is the need of the hour for MII to succeed. Institutions such as the Drona School of Engineering Practice, which orients engineers to practical hands-on exposure to high value engineering skills in an industrial environment, are the way forward.