Question: Explain major aspects of Defence Procurement Policy 2020. How can the policy help in boosting
Answer: Defence minister Rajnath Singh unveiled the Defence Procurement Policy 2020 guidelines that sets the parameters for buying defence products for Indian armed forces. Eventhough majority of Indian defence products are imported, the policy tries to encourage domestic manufacturing too.
Major aspects of Defence Procurement Policy
- Indigenous products
The policy has increased the domestic procurement of defence equipment by 10%. This is aimed at encouraging domestic manufacturers such as L&T, DRDO, HAL to invest more towards developing quality content that can match global standards.
The leasing category has been introduced for hiring defence products for a particular duration based on need. In current context it is not worthy to buy costly equipment which has limited usage, instead the products can be leased during need. In this way, there is no need to maintain redundant technology for a long period.
The defence products will have a certain warranty period during which the company will be responsible for maintaining the product with all additional costs. By introducing warranty extension policy, the government aims to increase the duration of the service period of products.
Boosting Make In India through Defence Procurement Policy 2020
- Fixed business for domestic companies
Earlier there was no guarantee that domestic companies will be able to secure government contracts for supplying products. Now there is 10% quota reserved for domestic companies, which makes up a substantial amount. This will encourage them to further enhance their technology in the future.
- Global companies manufacturing in India
The government has made rules that specify that global companies supplying products to India will have to manufacture certain amount of parts of their products in India. This will ensure that there will be transfer of skills over a period of time and will also boost local economy.
Thus, Defence Procurement Policy is a very good opportunity for domestic companies to increase their footprint and also contribute towards growth of Make In India initiative.