India on Monday announced that the armed forces will have to source military hardware from domestic markets and import of equipment should only be an exception.
The government amended the Defence Acquisition Procedure, 2020, to promote the “Make in India” initiative and “aatmanirbharta” (self-reliance).
“Going forward all modernisation requirements of the defence services and Indian Coast Guard are to be indigenously sourced irrespective of the nature of the procurement,” the defence ministry said in a statement. “Import of defence equipment/sourcing from the foreign industry of capital acquisitions should only be an exception and undertaken with specific approval of Defence Acquisition Council/Raksha Mantri.”
The ministry added that the domestic industry will not have to furnish Integrity Pact Bank Guarantee for acquisitions. The Integrity Pact clause is meant to prevent corruption in public procurement and the bank guarantee can be encashed by the government in case of violations.
The ministry said Earnest Money Deposit will be taken as a security bid for all acquisitions costing more than Rs 100 crore. It is usually a token amount paid to the seller, indicating an interest in the purchase. The ministry noted that this will be valid for the selected vendor till the contracts are signed and returned to the remaining vendors who did not get selected.
“Post contract, integrity pact will be covered through the performance cum warranty bank guarantee. Further, as per extant government of India policy, Earnest Money Deposit is not required from Micro and Small Enterprises,” the statement said.
To encourage domestic manufacturing, the defence ministry said that the other bidders who are qualified but have not been selected will be awarded a certificate indicating that the product has been successfully evaluated to facilitate vendors to explore other markets.
The total order quantities in acquisition cases are to be split between shortlisted vendors, wherever viable, the ministry said.
The ministry has also cut down the waiting time for projects under the iDEX framework by dispensing off with quantity vetting and scaling for initial procurements of the defence equipment.
“Post simplification, the timelines in the Make-II procedure will be reduced to 101-109 weeks from an existing total time period of 122-180 weeks,” the ministry said.
The iDEX programme, launched in 2018, is an ecosystem meant to foster innovation and technology in the defence and aerospace sectors, PTI reported.
India is one of the largest importers of arms globally and Monday’s move is another step to reduce dependency on foreign military equipment. The ministry has set a turnover goal of $25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years, including an export target of $5 billion (Rs 35,000 crore) worth of military hardware, PTI reported.