The Hindu Business Line : New defence procurement norms announced

New Delhi, Aug. 1 In an effort to expedite the acquisition of defence products, the Government has not only revised the offset policy to make it more industry friendly but also liberalised the licensing procedures and enhanced the financial powers of the Defence Services.

The new guidelines form part of the Defence Procurement Procedure-2008 which was released by the Defence Minister, Mr A.K. Antony, and come into effect from September 1 this year.

The revised guidelines allow a foreign vendor, who has created more credit than is required under the offset policy, to use the surplus credit for another contract. The new guidelines stipulate that surplus offset credit will remain valid for two financial years after the conclusion of the contract.

In an attempt to ensure that Indian industry also benefits from high value contracts, the Government has mandated a 30 per cent offset clause under which the winning company has to ensure that it acquires goods or services from India worth 30 per cent of total value of the contract. Currently, the Government insists on an offset clause in contracts over Rs 300 crore.

The new guidelines also seek to facilitate private sector participation in offset production by easing licensing conditions.

The revised guidelines state that private industry will be required to have an industrial licence only if it was stipulated under the guidelines and licensing requirements for the defence industry issued by the Department of Industrial Policy and Promotion. At present private industry needs to have an industrial licence before being allowed to participate in the offset programme.

Besides, the financial powers of the services have been enhanced with the Defence Secretary now having powers to clear proposals up to Rs 75 crore and service headquarters Rs 50 crore.

To bring about greater transparency, vendors will be given advance information before Request for Proposal are issued in all procurement cases except those for security sensitive products.

Later speaking to newspersons, the Minister said DPP-2008 was an experiment that should be given time to show results.

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