Monday, July 23, 2012

Exclusive! DPP 2012 in the offing?

Neelam Mathews
July 23, 2012 

The much-awaited Defense Procurement Policy 2012 has been cleared by the Cabinet Committee on Security (CCS), Aerospace Diary learns.

"The offsets policy will be released very soon. There were a few points that needed to be ironed out, a reason why it was late," a senior official in the MoD told Aerospace Diary.

The policy will not be retroactive and will be valid from the date it is introduced, we are told.

While the policy is expected to include  transfer of technology (TOT), vendors remain unclear how this will be implemented without any body to monitor it nor the method of payment for TOT. The question of IPR also needs to be addressed.

The 2012 USIBC advocacy agenda advancing the U.S. – India defense commercial relationship had asked for India to formulate a robust offset policy that promotes transparency and predictability, leading to a meaningful build-up of India’s indigenous industry capabilities by-

 Urging India’s Ministry of Defense (MoD) to increase resources committed to the Defense Offset Facilitation Agency
 Recommending that period of performance of offset contracts be extended for several years beyond the duration of the contract performances
 Recommending  banked credits be valid for seven to ten years, encouraging companies to develop tie-ups with Indian counterparts
 Supporting an introduction of offset multipliers to incentivize participation and collaboration with India’s small and medium enterprise (SME) sector
 Pressing the GOI to raise the 26% cap on FDI in the defense industry to 74%. (Aerospace Diary learns this may be increased to 49% on a case to case basis). The effect will spur greater investment and transfer of technology by American defense companies, resulting in increased opportunities for co-production, joint manufacturing, and offset partnerships with Indian industry. This will be particularly crucial as more original equipment manufacturers tie up with Indian industry to meet offset obligations.
 Supporting a greater match-up between U.S. acquisition processes (Foreign Military Sales [FMS], Direct Commercial Sales, and FMS Hybrid) and Indian Defence Procurement Procedures (DPP) by elaborating on FMS success stories, working with the MoD’s DPP to further educate the Indian establishment on benefits of FMS,  mapping GOI expectations on technology transfer to U.S. Department of Defense tech release policies (Office of the Secretary of Defense-Policy, Defense Technology Security Administration, and Acquisition Technology & Logistics), encouraging India to sign long-pending enabler agreements such as the Communications and Interoperability Security Memorandum of Agreement (CISMOA) and the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation. Such agreements are required by U.S. law to facilitate more technology sharing and an increased flow of information and expertise.
It has also pressed for streamlining No Cost–-No Commitment trials to reduce the bureaucratic and financial burden associated with prospective foreign vendors’ field trials and improve service-to-service engagement, especially for army programs, and deepen relationships with the Pacific Command (I-SFG).


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