Defence Procurement Policy - 'Make' procedure gives impetus for MSME sector

New Delhi, Mar 29 (KNN) Enhancing the role of MSMEs in defence sector is one of the defining features of Defence Procurement Policy, said the DPP document released on Monday.

Defence Minister Manohar Parrikar on Monday announced the launch of DPP. He made the announcement while speaking at the inaugural ceremony of Defence Expo 2016 at Naqueri-Quitol, Goa.

The amended DPP, according to Parrikar, is aimed at boosting India’s target of ‘Make in India’ policy, besides creation of major domestic defence industry to cater to its own needs as well as exports.

The provision of ‘Make’ category of capital acquisition is a vital pillar for realizing the vision behind the ‘Make in India’ initiative. Hence it is imperative that the ‘Make’ procedure should be structured to provide the necessary leverage to make adequate investments, build the required capabilities, and match up to the contemporary and futuristic requirements of the Indian armed forces.

The ‘Make’ procedure seeks to address the multiple objectives of self-reliance, wider participation of Indian industry, impetus for MSME sector, sound implementation, transparent execution and timely induction of equipment into Indian armed forces.

The criteria for sub-categorization of the ‘Make’ programs are - Make-I (Government Funded) and Make-II (Industry Funded).

Make-I (Government Funded) have projects involving design and development of equipment, systems, major platforms or upgrades thereof; necessitating harnessing of critical technologies, and may involve large infrastructure investment for development, integration, test and manufacturing facilities. Usually, projects under Make-I sub-category will involve a development period of not less than three years.

Projects under the Make–I sub-category, with estimated cost of prototype development phase not exceeding Rs. 10 crore, will be earmarked for MSMEs. However, if at-least two MSMEs do not express interest for a Make-I program of less than Rs. 10 crore, the same shall be opened up for all, under the condition that interested MSME(s), if any at that stage and meeting the eligibility criteria, will get preference over Non- MSMEs in selection of DAs.

Make-II (Industry Funded) has projects involving design and development of equipment, minor platforms, systems, sub-systems, components, parts or upgrades thereof; use of readily available commercial, military or dual use mature technologies, which may involve marginal infrastructure investment for development, integration, test and manufacturing facilities. Import substitution will be a key focus of projects under this category.

Projects under the Make–II sub-category, with estimated cost of prototype development phase not exceeding Rs. 3 crore, will be earmarked for MSMEs. However, if no MSME expresses interest for a Make-II program of less than Rs. 3 crore, the same may be opened up for all, under the condition that interested MSME(s), if any at that stage and meeting the eligibility criteria, will get preference over Non- MSMEs in selection of DAs.

Further, DPP mentions that SHQ would be responsible for undertaking feasibility studies of all projects under AAP – ‘Make.’

The aim of this study would be to identify the projects which Indian Industry has the capability to design and develop, within the timeframe required by the respective Services.

Feasibility studies will be carried out with involvement of all important stakeholders such as HQ-IDS, DRDO, DDP, Advisor (Cost) and MOD (Finance)/IFA as required. Industry associations including MSME associations, OFB & DPSUs may be consulted if considered necessary. SHQ may engage consultants/experts to assist in preparation of feasibility study report.

DPP focusses on institutionalizing, streamlining, and simplifying defence procurement procedure to give a boost to ‘Make in India’ initiative of the Government of India, by promoting indigenous design, development and manufacturing of defence equipment, platforms, systems and sub-systems. ‘Make’ procedure has also been refined to ensure increased participation of the Indian industry, said DPP 2016.

Enhancing the role of MSMEs in defence sector is one of the defining features of DPP. Cutting down permissible timeframes for various procurement activities, and institutionalizing robust mechanisms to monitor for probity at various stages of the procurement process, are the cornerstones of DPP. (KNN Bureau)