Indian private and public sector players may get priority in defence procurement contracts.
This has now been incorporated in the Defence Procurement Procedure (DPP) through an amendment that provides for a preferred order of categorisation, with global players being the choice of last resort. The first option will be to buy from Indian companies, followed by the ‘buy and make in India category’, the Defence Ministry said in a press release.
Under the second category, private and public sector firms can tie up with foreign vendors and produce the equipment required by the armed forces.
In an attempt to bring in greater clarity to the licensing procedures, the Ministry clarified to the Department of Industrial Policy and Promotion that dual use items would not require licensing.
The Ministry has also taken up with the Finance Ministry the resolution of deemed exports status for certain defence projects and rationalisation of the tax and duty structure impinging on the Indian defence industry.
“Industry can now expect exemption and benefits in taxes and duties, which has been a long-standing demand. Although this may take a year or more, it highlights the Government is working towards rationalisation of taxes for the defence industry,” said Nidhi Goyal, Director, Deloitte Touche Tohmatsu India, commenting on the proposal.
In a move that could have a positive impact on private participation in maintenance, repair and overhaul work, a DPP amendment has been approved that does away with nominations by the Department of Defence Production for such work and facilitates the selection of Maintenance Transfer of Technology (MToT) partners by Indian bidders.
In another move, the financial powers of the Service Chiefs and Director-General of Coast Guards have been raised three-fold to Rs 150 crore for capital acquisition cases.
To ensure regular supply of funds to the medium and small industry involved in the manufacturing of defence products, the Small Industries Development Board has decided to earmark Rs 500 crore for providing loans, and a further Rs 50 crore for equity support, the statement adds.