Private sector involvement in defence R&D made easier

Defence Minister Rajnath Singh on Tuesday unveiled a new version of the procurement manual of the premier military research institute Defence Research and Development Organisation featuring simplified procedures for the involvement of the private sector in various research and development projects.

Defence ministry officials said the new version of the manual has been brought out to encourage participation of private industry, including start-ups and micro, small and medium enterprises in defence research in sync with the government's ‘Atmanirbhar Bharat' (self-reliant India) initiative.

All deals, projects and research initiatives in DRDO are guided by the procurement manual.

The government has already announced its vision to make India a global hub of defence manufacturing, and initiated a series of reform measures to encourage the domestic defence industry.

"The procurement manual-2020 will facilitate faster execution of R&D projects/programmes. The modified features in the manual will go a long way to facilitate participation of industry in various R&D projects," the defence ministry said.

Some of the salient features of the new manual include increase of threshold limit for advance payment, placement of order on second lowest bidder (L2) in case lowest bidder L1 backs out and 'bid security declaration option' for depositing earnest money.

Several other enabling measures are exemption of bid security and performance security of up to Rs 10 lakh and not having negotiations for commercial off-the-shelf (COTS) items/services where price discovery takes place by market forces, the officials said.

They said the process for extension of the delivery period (DP) has been simplified for faster decision making and many of the internal procedures have been further simplified for deeper engagement with industry.

The previous revision of the procurement manual of the DRDO was last carried out in 2016.

In May, Finance Minister Nirmala Sitharaman rolled out a number of reform measures for the defence sector including making separate budgetary outlay to procure Indian-made military hardware, increasing FDI limit from 49 per cent to 74 per cent under the automatic route and generating a year-wise negative list of weapons which will not be allowed to import.

India is one of the most lucrative markets for global defence giants as it figured among top three importers of military hardware in the world for the last eight years.

According to estimates, the Indian armed forces are projected to spend around USD 130 billion in capital procurement in the next five years.

The government is eyeing a turnover of Rs 1.75 lakh crore (USD 25 billion) in defence manufacturing by 2025.