The Defence Acquisition Council (DAC) chaired by Union Defence Minister Manohar Parrikar on 11 January 2016 approved major changes in the new Defence Procurement Procedure (DPP) 2016.
The DPP 2016, which will take at least another two months for it to be notified, allows government funds up to 90 percent of development costs to private companies to push research and innovation. It also aims to enhance private sector participation and speed up procurement process.
The new DPP will streamline defence acquisitions and give a big impetus to indigenisation through the Make in India initiative.
Key highlights of DPP 2016
• A new category will be created to promote domestic manufacturing, including government funding for Research & Development and recognition of the Micro, Small and Medium Enterprises in technology development.
• Under the new category for Indigenously Designed, Developed and Manufactured (IDDM) equipment, it will be mandatory for 40 percent of the content to be sourced locally.
• Validity of the Acceptance of Necessity (AoN) has been brought down to six months from the earlier one year. It will help the defence forces to issue tenders faster.
• Addition of the policy to fund Indian private entities in R&D to encourage more local development.
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