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INFUSING GREATER EFFICIENCY IN THE

PROCUREMENT PROCESS AND


STRENGTHENING DEFENCE MANUFACTURING
BASE IN THE COUNTRY.

EXPEDITIOUS PROCUREMENT FOR ARMED
FORCES TO MAINTAIN OPERATIONAL
READINESS
playing processing
PROCUREMENTS


Indigenizatio
n
Level
SPEEDY
Reduced
field timelines
Simplification
of procedures
Clearly structured Appx F (Payment terms recast as
Commercial clauses) and Appx G (Commercial offer recast as
Evaluation Criteria of Price Bid Format).
RFP format for shipbuilding included.

CHAPTER I :BUY AND BUY & MAKE CATEGORIES
Preferred order of categorisation (P 20a).
Inclusion of additional information in SoC submitted to
DAC/DPB (P 20b).
SQR & AoN Validity (P 17, P 20).
Indian entities for MToT (P 28).
Indigenous content 30% for Buy (Indian) and 50% for Buy &
Make (Indian) categories has been defined clearly. (4a, 4c).
A method for assessment of indigenous content, based on
self certification by vendors, has been given at Appendix F
to Chapter I (P 7).
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Indigenization
Indigenous content requirement will now extend all
the way to lowest tier of sub vendor. (P4 Appx F, Ch I).
Provision for audit by MoD/MoD nominated agency
has been made, if found necessary (P5 Appx F, Ch I).
Penalties for not achieving stipulated indigenous
content levels at each stage with a scope to make up for
the deficiency at a later stage (P 8,10,11,12).
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CHAPTER II : MA KE CATEGORY
Proposed advance planning and consultation (Para 10(a)).
CHAPTER III : SHIP BUILDING PROCEDURE
Base and depot spares cost in offsets.
Provision of modification cost up to 4% of basic cost of
vessel permitted in competitive bidding (Addition of Para
59(k) to Chapter III).
Provisions for procurement of OBS and B&D spares defined
(OBS-MRLS with sufficiency clause, and B&D 15% of the
Basic cost of the vessel).
Model RFP format of Shipbuilding included.
Applicability of Offset obligations in shipbuilding cases.
Contract cost defined in Model RFP.
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Preferred categorisation in the following order :
Buy (Indian)
Buy & Make(Indian)
Make(Indian) Buy &
Make Buy(Global)
While seeking AoN, necessary to give justification for not
considering other higher preference categories.

Min 30% indigenous content on cost basis.
Overall indigenous content at least 30% of the total contract
value. Min 30% indigenous content also required in :
Basic cost of equipment.
Cost of MRLS.
Cost of SMT and STE taken together ;
Provided min 30% indigenous content is ensured in Basic
cost of equipment at all stages of contract, including the FET
stage.

Purchase from an Indian vendor (including JV /production
arrangement with OEM).
Min 50% indigenous content on cost basis. Implies indigenous
content in the total of
Basic cost of equipment,
Cost of MRLS,
Cost of SMT and STE.
Must be at least 50% of the total contract value.
Min 30% indigenous Indian content in the first basic equipment
made/assembled in India and in subsequent deliveries thereof.

Would include high technology complex systems or
critical components/equipment for any weapon
system to be designed, developed and produced
indigenously.
A minimum 30% indigenous content on cost basis
shall be required in such cases in the successful
prototype.

Finalization of SQRs before seeking AoN (Para
17 Chapter 1).
Reducing validity of AoN from 2 years to one year except
Buy and Make (Indian).
Request for extension of the bid submission date - at least
two weeks prior to the bid submission date with adequate
justification (Para 33).

Enhanced delegation of financial powers
Financial powers of DPB for according AON enhanced
from Rs 100 crores to Rs 300 crores.
DAC has tripled financial powers of SHQs from current
Rs 50 crores to Rs 150 crores.

Indigenous content has been clarified.
Doing away with requirement of short-listing vendors through
the PAC - Buy and Make (Indian) procedure simplified.
Instead of PAC, after accord of AoN, SHQ, shall hold
consultations along with DDP and DRDO Reps with the 1
st

stage short-listed vendors. These consultations may relate to
PSQRs, delivery timelines and technology absorption aspects.
(Para 25a).
Simplification of the Make procedure is underway and is
expected to be completed in few months. FTP is also being
revised.

Payment Terms and Commercial Offer
Appendix F and G to the RFP have been modified as :
Commercial Clauses - updated and rationalised to create a
level playing field.
Evaluation Criteria of Price Bid Format - made more
elaborate to reduce subjectivity.

MToT hitherto reserved for OFB and DPSUs through the
nomination process.
Provision of ToT to Indian Public/Private entity, for providing
Maintenance Infrastructure, would be applicable for BUY
(Global).
Decision would be debated in SCAPCHC and approved by
DAC.

To utilize the expertise gained by the industry in the last
decade in defence sector.
Industry to get meshed in the supply chain for sourcing by
major Global defence OEMs.
To progressively reach a stage where the industry could, on
its own and through its own R&D efforts, start manufacturing
the defence equipment required by the armed forces.
Finally, the Indian industry must aim at acquiring the
capability to develop futuristic technologies. That will be the
real coming of age for the Indian industry.

Offsets and multipliers for MSMEs.
Preferred Order of Categorization Major industries may
form JV for indigenous production. Opportunity for
participation as IOPs, provision of components, spares and
SMTs/STEs.
Indigenous Content extended to lowest tier of sub
vendors. Opportunity for vendors making components to
compete against cheaper foreign components.
Percentage Indigenization includes MRLS and
SMTs/STEs.
Ultimately, Industry to provide bulk of defence requirements
as also get meshed in the global supply chain.

Indigenous content in Buy & Make(Indian) -
50% .
Rationalization of Taxes and Duties.
Difficult to hold price for long duration in
finalization of cases .
Calculation of Discounted Cash Flow (DCF) to
select L1.
Chapter III: Shipbuilding - totally aligned to
Govt Shipyards and does not recognize
shipyards in private sector.

Buy Global as a categorization be abolished. In
extreme cases FTP may be employed for
procurement.
Indigenization only 30% in Buy & Make (Indian)
cases.
ERV has to be extended for all categories of
current and ongoing procurements/ contracts.
Progressive Milestone Payments through Letter
of Credit.
Changes in Payment terms wrt excise & taxes.
Issue of public version of LTIPP.
TECHNOLOGY PARTNERS FOR
TECHNOLOGIES REQUIRED
TO CASE BASIS FOR CRITICAL
INDUSTRY

ENABLE INDUSTRY TO SEEK
PROMOTE INDUCTION OF KEY
FUTURE PROGRAMS
Public Version of
LTIPP
INVESTMENT PLANNING BY
JV FORMATION (FDI ON CASE
TECH)

THOSE WHO ARE NOT HAPPY WITH DPP-2013 MAY READ
AND COMPARE WITH DPP-2002.
THE INDIAN INDUSTRY HAS AN OPPORTUNITY. GRAB IT.

We hope that the defence industry as well as the
procurement agencies will find DPP-2013 to be a
progressive step aimed at giving impetus to indigenisation,
creating level playing field between private and public sector
and expediting the procurement process as a whole. We will
continue in our endeavour to refine and improve the
procedure and welcome and suggestions for improvement.
- HONBLE RM SHRI AK ANTONY