Government to open 25 defence projects for private sector

The government is looking at opening up 25 projects for private industry participation in the defence sector. "We have initially shortlisted these. There will have to be many interactions with the ministry and other stakeholders to finalise them," defence production secretary AK Gupta said here on Tuesday.

He also said that as many as 79 units, being operated by 50 private sector companies, have begun production since the private sector was thrown open in 2001.

"Out of the 319 licences issued to 190 companies, 79 licences of 50 companies have entered at the production stage," Gupta said at the 'Make in India’ summit.

He said since the defence sector was thrown open to the private sector way back in 2001, as many 319 licences were issued, of which 190 were issued in the past 18 months or so.

On the new defence procurement policy (DPP), Gupta reiterated what defence minister Manohar Parrikar said on Monday. He said the new policy will be effective from April and will have a new offset clause, which will have freedom to change the sourcing model as well as the local partner. He declined not to elaborate.

Gupta also said government's new, simplified defence procurement procedure has made things much more 'transparent'."A lot of things have been streamlined. Earlier what used to happen in offset agreements was that once you are part of an agreement, you can't change anything. Now full flexibility has been given to the industry to choose their offset partners and components provided both are in the eligibility list," he said.

He also said, the DPP will also drastically change bidding norms, which currently gives the maximum weight to the cost."We will have more friendly and feasible bidding norms wherein the over riding criterion will not be cost alone. We will also stress on quality, safety and durability and after sales and other features, as wining conditions. The lowest quote or L1 will typically not be the winning element,” he said.

Currently a company that quotes L1 typically wins the contract. This cost-based winability is prevalent in all government contracts.

Parrikar had said on Monday that by keeping the procurement system clean and transparent, the government could bring down costs by at least 20-25 per cent, ensuring that the same is reflected in the new DPP.