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Thursday, 24 March 2016 00:00
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Without orders getting placed fast, policy won’t help

 

While it was always known that the success of the Make-in-India programme hinged critically on how quickly defence production picked up in the country, defence minister Manohar Parrikar has furthered this with his new defence procurement policy. While the earlier policy also gave a higher priority to deals where the manufacturing was predominantly done in India, the new policy brings in a new category—Indian Designed, Developed and Manufactured (IDMM)—which will be the most preferred acquisition category. To qualify for this, apart from being designed and developed in India, the local content has to be at least 40%. Even more important, for the first time ever, the policy states that while the lowest bid will get selected under normal circumstances, if there is a superior product, it will also be considered—in other words, L-1 will no longer be the only method of procurement. Developers chosen to work on prototypes will get more of their money back than earlier—up to 80% of the cost was reimbursed up till now and the new policy raises that to 90%.

While there have been a few companies that have already offered to set up manufacturing facilities in India, a lot more will have to be done for it to really pick up steam. To begin with, if placing orders continues at a snail’s pace, it will be several years before serious capital gets ploughed into defence production in India. This is something defence minister Parrikar will have to work on along with the armed forces. As in other areas, the big fear is that a decision taken today can be questioned later and officers hauled up on corruption charges. Parrikar will have to come up with a solution that insulates decision-makers and allows them to take decisions fast and, more important, the prime minister will have to okay this.

 

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