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The Defence Acquisition Procedure (DAP) 2020 has been amended to indigenous procurement and promote ease of doing business for the military and aerospace manufacturing market worth about ₹1 lakh crore. Import of defence equipment from a foreign supplier has to be "an exception and undertaken with specific approval of Defence Acquisiton Council/Raksha Mantri (Defence Minister)".
The altered DAP seeks to encourage the participation of Micro and Small Enterprises (MSEs) and startups in the tri-services modernisation effort, which has acquired a certain pace due to growing global insecurity precipitated due to the stand-off with China and Moscow-Ukraine war.
The government move, expected to strengthen the Make in India initiative in the defence sector, will help in reducing the financial burden on the domestic defence industry. As advised by the Ministry of Finance, the requirement of Integrity Pact Bank Guarantee (IPBG) has been dispensed with, said the defence ministry. Instead, it pointed out that Earnest Money Deposit (EMD) will be taken as bid security for all acquisition cases with an Acceptance of Necessity (AoN) cost of more than ₹100 crore.
The "EMD will be valid for the selected vendor up to signing of contracts and returned to remaining vendors post declaration of selection. Post contract, Integrity Pact will be covered through the Performance Cum Warranty Bank Guarantee (PWBG)," the MoD stated in an official statement. The Centre has extended its policy to the defence sector and waivied off the need for EMD for MSEs.
To encourage wider exposure to indigenous defence manufacturing sector, the ministry stated that the total order in acquisition cases would be split between shortlisted vendors, wherever viable. Interestingly, the other technically qualified bidders who can't be awarded contract will be issued a certificate by the Services indicating that the product has been successfully trial evaluated, the ministry stressed. This step has been inserted into the DAP to facilitate vendors to explore other markets.
"Make-II procedure of DAP-2020, involving indigenisation of defence equipment through industry funded projects at prototype development stage, has been simplified by incorporating Single Stage Composite Trials of prototypes and dispensing off with quantity vetting and scaling for initial procurement in the delegated cases," the ministry explained. The MoD believes it will help reduce the timelines in the Make-II procedure to 101-109 weeks from an existing total time-period of 122-180 weeks.
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