Defence Ministry's move to fund weapons development with private companies favoured

[PARIKRAMA]

Defence Ministry's move to fund weapons development with private companies favoured

Key Points

1. MOD to fund 90% of the development cost of select new weapon systems by pvt sector
2. Guaranteed return of the remaining 10% invested if the product is not selected/not purchased
3. Plans are for reserving contracts specially for SME/MSME - smaller contracts
4. MII "Make" Procedure to have 20% mobilization advance for pvt companies under a separate category
5. GOI would select specific products under MII "make Procedure" funding the eligible Indian companies the R&D cost on the basis of Military's requirement.
6. This amended DPP is aimed at boosting indigenous design and development as well as manufacturing.
7. The larger aim is fulfilling Forces requirement and creating a credible MIC
8. All defence products of less than Rs 10 cr developmental cost is reserved for MSME (Micro Small and Medium Enterprise)
9. Industry wants more decisions and clarity on procedures for blacklisting firms, corruption charges etc

News Article:
Defence Ministry's move to fund weapons development with private companies favoured

NEW DELHI: The defence ministry's move to fund 90 per cent of the developmental cost of select new weapon systems by the private sector, with a guaranteed return of the remaining 10 per cent invested by the entity has found favour across the industry as well as its plans to reserve smaller contracts for MSMEs.

While the new defence procurement policy is expected to come into effect only by March, Defence Minister Manohar Parrikar has announced a major change in the 'Make procedure' that would also provide private companies a 20 per cent 'mobilization advance' under a separate category.

In future purchases, the government would select certain products to be bought under the 'Make procedure', say a future infantry combat vehicle or a new assault rifle. This would go only to eligible Indian players who would then carry out research and development on the basis of the military's requirements. While the Make process was also present in older policies, no project has yet materalised through the process due to several bottlenecks and constrains that were brought forward by the industry will be done away with. The amended DPP will give a boost to indigenous design and development as well as manufacturing. Amendments will create a win-win situation for Indian Defence Forces and the Indian Defence Industry," Baba N Kalyani, Chairman CII National Committee on Defence said.

All defence products which will have a developmental cost of less than Rs 10 cr have been reserved for Micro Small and Medium Enterprises (MSMEs). "The revised Make procedure addresses the most pressing concerns of the private sector and also ensures a significant role for MSME'S. The Mod should now endeavour to release a greater number of programs in this category," said Ankur Gupta of EY.

However, the industry is keen for decisions on more pressing issues, including the new procedure for blacklisting of foreign firms accused of corrupt practices as several tie ups and joint ventures hinge on the ministry's decision.

Also, the strategic partnership model details are also awaited, even though Parrikar has indicated that the process will take several months for clearance as it also requires cabinet approval.

Source:
Defence Ministry's move to fund weapons development with private companies favoured - The Economic Times

 

[Abingdonboy]

Defence Ministry's move to fund weapons development with private companies favoured

Key Points

View attachment 286990

1. MOD to fund 90% of the development cost of select new weapon systems by pvt sector
2. Guaranteed return of the remaining 10% invested if the product is not selected/not purchased
3. Plans are for reserving contracts specially for SME/MSME - smaller contracts
4. MII "Make" Procedure to have 20% mobilization advance for pvt companies under a separate category
5. GOI would select specific products under MII "make Procedure" funding the eligible Indian companies the R&D cost on the basis of Military's requirement.
6. This amended DPP is aimed at boosting indigenous design and development as well as manufacturing.
7. The larger aim is fulfilling Forces requirement and creating a credible MIC
8. All defence products of less than Rs 10 cr developmental cost is reserved for MSME (Micro Small and Medium Enterprise)
9. Industry wants more decisions and clarity on procedures for blacklisting firms, corruption charges etc

News Article:
Defence Ministry's move to fund weapons development with private companies favoured

NEW DELHI: The defence ministry's move to fund 90 per cent of the developmental cost of select new weapon systems by the private sector, with a guaranteed return of the remaining 10 per cent invested by the entity has found favour across the industry as well as its plans to reserve smaller contracts for MSMEs.

While the new defence procurement policy is expected to come into effect only by March, Defence Minister Manohar Parrikar has announced a major change in the 'Make procedure' that would also provide private companies a 20 per cent 'mobilization advance' under a separate category.

In future purchases, the government would select certain products to be bought under the 'Make procedure', say a future infantry combat vehicle or a new assault rifle. This would go only to eligible Indian players who would then carry out research and development on the basis of the military's requirements. While the Make process was also present in older policies, no project has yet materalised through the process due to several bottlenecks and constrains that were brought forward by the industry will be done away with. The amended DPP will give a boost to indigenous design and development as well as manufacturing. Amendments will create a win-win situation for Indian Defence Forces and the Indian Defence Industry," Baba N Kalyani, Chairman CII National Committee on Defence said.

All defence products which will have a developmental cost of less than Rs 10 cr have been reserved for Micro Small and Medium Enterprises (MSMEs). "The revised Make procedure addresses the most pressing concerns of the private sector and also ensures a significant role for MSME'S. The Mod should now endeavour to release a greater number of programs in this category," said Ankur Gupta of EY.

However, the industry is keen for decisions on more pressing issues, including the new procedure for blacklisting of foreign firms accused of corrupt practices as several tie ups and joint ventures hinge on the ministry's decision.

Also, the strategic partnership model details are also awaited, even though Parrikar has indicated that the process will take several months for clearance as it also requires cabinet approval.

Source:
Defence Ministry's move to fund weapons development with private companies favoured - The Economic Times

Excellent, let's get some competition brewing between these colossal private entities (TATA, L&T etc) and the DPSUs, the net winner will be the Indian armed forces and Indian business in the long run as more succesful R&D projects means more scope for exports.

In many areas the private sector can certainly outperform DPSUs in R&D (especially at the lower end), naturally DRDO will remain the most strategically positioned entity in India undertaking defence R&D but there are many areas they can outsource to the private sector and I think the Kestral (in JV with TATA) is the perfect embodiment of this.


@Water Car Engineer @acetophenol

 

[Indiran Chandiran]

I have a slightly tangential take on this.

Having seen enough of public sectors in India , while this move is welcome , the long term threat to PSU's & organizations like DRDO's are gravely existential. These talent repositories will be preyed upon by rapacious pvt operators. There was this poignantly nostalgic article recently of HMT reviving their watch assembly line one last time . The story of how Titan rose at the cost of HMT while preying upon their talent is too well known to be recounted here. How much of it was govt apathy ? how much of it was neglect by the HMT management ? How much of it was a combination of both of these with some other factors? one doesn't know but I suspect there is a very interesting story out there which needs a teller.

At the same time , I believe the government has little choice but to come out with attractive policies like the ones described above , going by the way various govt defense research organizations & PSU's have undertaken their tasks in an extremely unprofessional manner , at a leisurely pace bereft of any responsibility to adhere to timelines, but to invite the pvt sector on given the exigencies that have now almost over whelmed the defense establishment in terms of R& D , manufacturing and procurement - w.r.t to their efficacy , quality , timelines, etc.

While professionalism will definitely be of a higher order , I suspect we are seeing the dawn of a ruthlessly commercial & more efficient MIC , which given the likes of Reliance in it is certainly going to raise more than a fair share of eyebrows in the near future with the way they conduct their business.

 

[PARIKRAMA]

I have a slightly tangential take on this.

Having seen enough of public sectors in India , while this move is welcome , the long term threat to PSU's & organizations like DRDO's are gravely existential. The talent repository will be preyed upon by rapacious pvt operators. There was this poignantly nostalgic article of HMT reviving their watch assembly line one last time . The story of how Titan rose at the cost of HMT while preying upon their talent is too well known to be recounted here. How much of it was govt apathy ? how much of it was neglect by the HMT management ? How much of it was a combination of both of these with some other factors? one doesn't know but I suspect there is a very interesting story out there which needs a teller.

At the same time , I believe the government has little choice but to come out with attractive policies like the ones described above , going by the way various govt defense research organizations & PSU's have undertaken their tasks in an extremely unprofessional manner at a leisurely pace bereft of any responsibility to adhere to timelines, but to invite the pvt sector on , given the exigencies that have now almost over whelmed the defense establishment in terms of R& D , manufacturing and procurement - w.r.t to their efficacy , quality , timelines, etc.

while professionalism will definitely be of a higher order , I suspect we are seeing the dawn of a ruthlessly commercial & more efficient MIC , which given the likes of Reliance in it is certainly going to raise more than a fair share of eyebrows in the near future with the way they conduct their business.

Very well said sir...

 

[Indiran Chandiran]

Very well said sir...

Thanks bro. please don't embarrass me by calling me Sir.