DAC Simplifies Procedure to Develop Defence Equipment through Indian Industry; Clears Procurements of Assault Rifles and Carbines worth Rs 3,547 Crs

The Defence Acquisition Council (DAC), chaired by Raksha Mantri Smt Nirmala Sitharaman, met on 16 January and simplified ‘Make II’ procedure, which prescribes guidelines to be followed to develop and manufacture defence equipment through Indian Industry. The DAC also cleared procurement of 72,400 assault rifles and 93,895 carbines on fast track basis for Rs 3,547 crore to enable the Defence Forces to meet their immediate requirement for the troops deployed on the borders.

To encourage participation of private sector in defence design and production and to give a boost to ‘Make in India’ programme, the Council today introduced significant changes in the ‘Make II’ category of the Defence Procurement Procedure. Considering that no government funding is involved in ‘Make II’ project, the DAC simplified the procedure to make it industry friendly, with minimal government control. The salient aspects of the revised procedure will now allow Ministry of Defence to accept suo-motu proposals from the industry and also allows start-ups to develop equipment for Indian Armed Forces. The minimum qualification criteria to participate in ‘Make II’ projects has also been relaxed by removing conditions related to credit rating and reducing financial net worth criteria.

As per the earlier ‘Make II’ procedure, only two vendors were shortlisted to develop prototype equipment. Now, all vendors meeting the relaxed eligibility criteria will be allowed to participate in the prototype development process. The vendor will not be required to submit Detailed Project Report. After accord of approval of the ‘Make II’ project by the council, all clearances will be accorded at Service HQ (SHQ) level.

To hand-hold industry and start-ups, SHQs will now setup project facilitation teams to act as the primary interface between the SHQ and the industry during the design and development stage. These teams would provide technical inputs, trial infrastructure and other facilities as required by the vendor. Even if a single individual or firm offers innovative solutions, the SHQ will now have the option to accept and process the vendor’s development initiative. SHQs will be allowed to hire domain experts/consultants from private sector to increase outreach and enhance awareness among the industry.

Most importantly, there will be no foreclosure of project after the project is sanctioned, except on default by the vendor, to ensure that the successful vendor has assured orders.