New defence procurement policy likely in May-India

[tigershark]

New defence procurement policy likely in May
Huma Siddiqui
Posted online: Tuesday , April 22, 2008 at 2309 hrs IST

New Delhi, Apr 21 With the country's defence market poised to touch an all-time high of $ 1 billion by next year, the government's much-awaited new defence procurement policy (DPP) is now expected only sometime in late May, which may lead to a second extension of the requests for proposals for the 126 aircraft medium multi-role combat aircraft (MMRCA) for the Indian Air Force (IAF).

According to sources in the defence ministry, “The fine tuning of certain important issues is still going on and it likely to be finalised by the end of May.”

Apart from the offsets issue, the banking of credits needs to be fine tuned before the new policy is announced, sources explained.

While there is unanimity in the ministry of defence that both transfer of technology and banking of credits should be allowed, work is still going on therefore it will take time to be implemented, said officials.

“Several global contenders for the $10-billion deal for 126 MMRCA had expressed their concerns on the banking of credits, another extension for the tender submission cannot be ruled out,” they said.

“We are in the process of making decisions for bringing about changes to the offsets policy. These decisions are in the final stages of being taken, and when they are taken, there will be amendments to the offsets procedures.”

At present, though the request for proposal (RFP) for the 126 aircraft, which as per the schedule is due to be submitted by April 28, is based on the DPP 2006, the offsets component in the MMRCA RFP is expected to be submitted before July. And the governments hope to release the new DPP by then.

Infact, the defence ministry is looking for ways to deal with the huge business from offsets that is expected to flow in the country soon. A handful of officers in the Defence Offsets Facilitation Agency (DOFA), the MoD body responsible for offsets, will find itself evaluating offsets proposals worth billions.

In March, in anticipation of a new DPP, some European Companies had sought a delay by eight weeks.

According to the minister of defence AK Antony, “The offsets policy that was part of the defence procurement procedure announced in 2006 was ‘at a nascent stage and still evolving’.”

The revised procedures were to be enunciated by April to bring them in line with the best international practices.

For the second time since it came into force...
 in 2002, the government is undertaking a comprehensive revamp of the defence procurement policy that could include setting up of a mechanism to register arms agents, a defence official said.

The government recently held consultations with multinational vendors, after they publicly voiced reservations whether the Indian defence industry could absorb the quantum of offsets, which would be generated as the country goes in for multi billion mega deals in next three to four years....

Source
http://www.financialexpress.com/news/New-defence-procurement-policy-likely-in-May/299762/