New Delhi: India is planning to lease military equipment not used in actual war — transport fleet, trainers and simulators — as part of its revamp of the Defence Procurement Procedure (DPP), the bible of the defence ministry when it comes to acquisition.
Defence Minister Rajnath Singh has unveiled the draft DPP, 2020 which focuses on Make in India and indigenous defence capability enhancement.
Another important idea is the creation of a specialised trial wing that will carry out Field Evaluation Trials of defence equipment.
The objective of trials will be to nurture competition rather than elimination for minor deficiencies.
Higher indigenous content
The draft policy also proposes increasing the Indigenous Content (IC) stipulated in various categories of procurement by about 10 per cent to support the ‘Make in India’ initiative.
A new Category — Buy (Global – Manufacture in India) — has been introduced with a minimum 50 per cent indigenous content on cost basis of total contract value.
Only the minimum necessary will be bought from abroad while the balance quantities will be manufactured in India, a statement by the Ministry of Defence said.
This would be in preference to the ‘Buy Global’ category as manufacturing will happen in India and jobs will be created in the country, it said.
Leasing of military equipment
Talking about the leasing clause, the proposed DPP 2020 says the new category has been introduced to substitute huge initial capital outlays with periodical rental payments.
Leasing is permitted under two categories — Lease (Indian) where Lessor is an Indian entity and is the owner of the assets and Lease (Global) where Lessor is a Global entity.
This will be used for military equipment not used in actual warfare like transport fleets, trainers, simulators among others.
Sources said rather than spending huge capital budget on procurement of these items, they can be rented which would also entail all spares and service.
The scope and options for Product Support have also been widened to include contemporary concepts like the Performance Based Logistics (PBL), Life Cycle Support Contract (LCSC), Comprehensive Maintenance Contract (CMC) among others to optimise life cycle support for equipment.
The capital acquisition contract would normally also include support for five years beyond the warranty period, under the proposed DPP 2020.
It also lays emphasis on product export under offsets while incentivising offsets for units in defence corridors.