MoD procurement policy proposes ban on import of specific weapons

The Ministry of Defence (MoD) on Tuesday issued a second draft of the Defence Procurement Procedure of 2020 (DPP-2020) and solicited comments by August 10, four months after it put out the first draft of the new manual that will supersede and update the current DPP-2016.
“Based on inputs received from the environment, DPP-2020 has now been titled as Defence Acquisition Procedure (DAP) 2020,” stated the MoD. Driving this terminological change is the conviction that the policy should look beyond procurement (purchase) of equipment and provide for alternatives such as leasing and upgrading.
The draft DAP-2020 retains the first draft’s emphasis on promoting higher indigenous content in equipment manufactured in India, including under licence from foreign vendors. For most acquisition categories, the DAP-2020 will demand 10 per cent higher indigenisation than under DPP-2016. (see graphic)
For the first time, the MoD proposes to incorporate into official policy a ban on import of specific kinds of weapons and platforms.
“With a view to promote domestic and indigenous industry as also align the DAP with the reforms enunciated in the Atmanirbhar Abhiyan (self-reliance campaign), the MoD will notify a list of weapons/platforms banned for import, updated from time to time,” the draft states.
It is unclear whether this “no import list” will be aligned with the MoD’s Defence Production Policy (DPrP) of 2018, which mandates self-reliance by 2025 in the production of helicopters, fighter aircraft, warships, tanks, and missiles.
DPrP-2018 also stipulates raising exports to $5 billion annually by 2025, and producing goods and services worth $26 billion to create employment for 2-3 million people.
The MoD has also introduced a new procurement category, entitled Buy (Global — Manufacture in India). This stipulates indigenisation of at least 50 per cent of the contract value of a foreign purchase bought with the intention of subsequently building it in India with technology transfer.

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Meeting this would require vendors to supply only the minimum necessary numbers from abroad in ready-built condition, while manufacturing a larger share in India.
The category also allows vendors to meet the indigenous content requirement through manufacturing spares and assemblies, or setting up maintenance, repair and overhaul (MRO) facilities for the equipment, including through the foreign vendor’s subsidiary in India.
The draft DAP-2020 details the procedures for “leasing” of equipment and platforms. Leasing is expected to save money by permitting the military to rent back-up equipment and services, such as air transport, mid-air refuelling, MRO and simulator training, rather than incur huge capital outlays in buying outright.


In addition to a full new chapter on “leasing”, the draft DAP-2020 also incorporates a new chapter for procuring equipment and platforms based on software and information and communications technology (ICT). Given the rapid obsolescence of ICT-based systems, more flexible procurement processes are needed to keep up with change.
Another new chapter deals with ‘post-contract management.” This lays down guidelines and processes for issues that arise during the contract period, which typically last for several decades in defence contracts.
While aiming at speeding up procurement, the new procedure marginally slows the Fast Track Procedure, which is designed for emergency purchases. DPP-2016 mandated a maximum period of 112-169 days for concluding a contract, including the time for trial evaluation. DAP-2020 stipulates a slightly longer period of 122-231 days. In both cases, delivery of equipment would take another 3-12 months from the date of contract signing.
The new procedure is being drafted by an MoD committee headed by its acquisitions chief, Apurva Chandra.

Karnataka exempts aerospace and defence firms from Covid-19 lockdown

In a decisive measure to protect Karnataka based companies that manufacture parts and systems for the assembly lines of global aerospace and defence (A&D) majors like Boeing and Airbus, the state government has exempted local A&D manufacturers from the nationwide anti-Covid-19 lockdown and permitted them to resume manufacturing activities with immediate effect.
“…The State Government hereby [exempts] industries supplying to Defence & Aerospace manufacturing… from the purview of the Lockdown and further to relax the restrictions imposed on the movement of workers and staff working in these industrial units,” stated a circular issued on Wednesday by Gaurav Gupta, the principle secretary in Karnataka’s commerce and industries department.

It is unclear whether the Karnataka government’s action will be emulated by the governments of Telangana and Maharashtra, where A&D firms also have a significant presence. Tamil Nadu had declared A&D industries to be “essential public utilities” on March 24.
This comes as a relief to Karnataka’s A&D manufacturing firms, consisting mostly of medium, small and micro enterprises (MSMEs) such as Dynamatic Technologies, Rossell India Ltd and Sasmos, who are, for certain components and systems, the sole suppliers to Boeing production lines in the US and the Airbus assembly line in Toulouse, France.
For example, Dynamatic builds “flap track beam assemblies” for all 58 single-aisle airliners that Airbus assembles each month. Without the on-time delivery of this crucial system, Airbus’ assembly of A-318, A-319, A-320 and A-321 airliners in France (54 per month) and China (four per month) would grind to a halt.
Indian A&D firms believe that uninterrupted and timely supply remains critical for their credibility. In the US and France, A&D production continues, even as other factories and shops have been shuttered to stop the spread of Covid-19. The US federal government has ordered the A&D industry’s 2.5 million employees to continue reporting for work, after the defence industry lobbied Congress and the Pentagon for a special dispensation on the grounds of national security.
In France, too, Airbus was closed for four days last fortnight, but then resumed production and assembly activities with the government’s encouragement.
In these circumstances, Indian A&D firms are experiencing strong pressure to adhere to contracted supply schedules. This was highlighted over the weekend, when the highway police stopped a container truck transporting an Apache helicopter cabin, manufactured in Hyderabad by Tata Advanced Systems Ltd (TASL), to Mumbai for onward shipment to Boeing’s Apache helicopter assembly facility in the US. Eventually, the Union government was requested to intervene to allow the truck to proceed to Mumbai, where the cabin was shipped to the US.
“For Indian firms supplying global majors, Covid-19 is both a threat and an opportunity. We could shelter behind force majeure clauses in our contracts to justify failure in meeting supply obligations due to the pandemic. On the other hand, we could demonstrate that, despite serious difficulties, Indian firms will deliver on time,” says Udayant Malhoutra, chief of Dynamatic Technologies.
With this motivation, Malhoutra petitioned the Karnataka government to allow A&D production as a special exemption from the lockdown. “Karnataka’s reaction was swift and decisive. The state government took just five days to issue the exemption order. Now it is up to us to resume production quickly,” he said.
A&D firms such as Dynamatic have already implemented enhanced separation norms between workers and sophisticated Covid-19 awareness and prevention programmes. However, their workers, many of whom live within walking distance of the production plant, will have to obtain curfew passes from the police to travel to work.
Indian A&D firms are carving out a steadily growing space as suppliers to global “original equipment manufacturers” (OEMs) such as Boeing, Airbus, Lockheed Martin, Bell Helicopters and others. Last year, Boeing sourced over Rs 7,000 crore worth of components and services from over 200 Indian companies, while Airbus sourced over Rs 4,500 crore worth of components and services from some 45 Indian companies.

Defence Ministry approves procurement of 73,000 assault rifles from US

In a major move towards infantry modernisation, the Defence Ministry has cleared a long-pending proposal of the Army to procure around 73,000 assault rifles from the US under fast track mode, official sources said on Saturday.
Defence Minister Nirmala Sitharaman approved procurement of the Sig Sauer rifles which will be used by troops deployed along the nearly 3,600-km border with China, the sources told PTI.

They said the rifles, being used by the US forces as well as several other European countries, are being bought under the fast track procurement procedure.
"The contract is expected to be finalized within a week. The US firm will have to deliver the rifles within one year from the date of finalising the deal," said a senior official involved in the negotiation of the deal said.
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Army sources said the US-manufactured rifles will replace the Insas rifles.
The world's second largest standing Army has been pressing for fast-tracking the procurement of various weapons systems considering the evolving security threats including along India's borders with Pakistan and China.
In October, 2017, the Army began the process to acquire around 700,000 rifles, 44,000 light machine guns (LMGs) and nearly 44,600 carbines.
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Around 18 months ago, the Army had rejected an assault rifle built by the state-run Rifle Factory, Ishapore, after the guns miserably failed the firing tests.
Following it, the Army started scouting for rifles from the global market.
The procurement of assault rifles has witnessed significant delays due to a variety of reasons including the Army's failure to finalise the specifications for it. The Army needs around 700,000 7.62x51 mm assault guns to replace its INSAS rifles.

MoD clears Rs 460-bn purchase of missiles, guns and naval helicopters

The defence ministry’s apex procurement body, the Defence Acquisition Council (DAC), accorded approval on Saturday for acquisitions worth about Rs 460 billion. This includes missiles and two types of helicopters for the Navy, and artillery guns for the Army.
The biggest procurement green-lighted today is the Rs 217.38 billion purchase of 111 naval utility helicopters (NUH), which will be built by a competitively chosen Indian private sector company.
"This is the first project under the MoD's prestigious Strategic Partnership (SP) Model that aims at providing significant fillip to the government's 'Make in India' programme. SP Model envisages indigenous manufacturing of major defence platforms by an Indian SP, who will collaborate with foreign OEM (original equipment manufacturer), acquire niche technologies and set up production facilities in the country," stated the defence ministry on Saturday.

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The search for a suitable foreign OEM began more than a year ago. On December 1, the Navy chief, Admiral Sunil Lanba, said: "We have floated an RFI (request for information) and we have gotten responses from five OEMs. They are being examined."
On July 30, the defence ministry had promulgated the "implementation guidelines" for choosing an SP in the helicopter category, clearing the way for this procurement.
The basic SP policy framework is a part of the Defence Procurement Procedure of 2016 (DPP-2016). However, equipment-specific selection criteria need to be separately drawn up for each of the four weapons categories the SP policy covers -- fighter aircraft, helicopters, submarines and armoured vehicles. The guidelines for fighters, submarines and armoured vehicle categories are still awaited.
Multi-role helicopters
In another procurement that the Navy chief had identified as "the most important helicopter for us", the DAC cleared the purchase of 24 naval multi-role helicopters (NMRH) that operate from the decks of capital warships, providing early warning and locating and destroying enemy submarines.
The Navy's NMRH fleet currently consists of less than a dozen vintage Seaking helicopters that are increasingly difficult to maintain. While the acquisition of replacement NMRH has dragged on for over a decade, the helicopter hangars of the Navy's frontline warships have remained effectively empty.
"To enhance the capability of Navy at sea, approval has also been granted for procurement of anti-submarine capable, 24 in number multi role helicopters, which are an integral part of the frontline warships like the aircraft carriers, destroyers, frigates and corvettes. Availability of MRH with the Navy would plug the existing capability gap," said the defence ministry.

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Intriguingly, the ministry has not announced which procurement category these helicopters are being bought under. There are reports that the contract is being awarded on a single-vendor basis to US aerospace giant, Lockheed Martin. This comes just days ahead of the 2 + 2 US-India meeting in Delhi on September 6.
The usually credible defence blog, Livefist, writes: "The Indian MoD today cleared decks for the navy to contract for 24 Lockheed Martin-Sikorsky MH-60 Romeo maritime helicopters in a government-to-government deal with the Pentagon. The deal is expected to be worth $1.8 billion (Rs 12,500 crore)."
The MH-60 Romeo is built by Sikorsky, which Lockheed Martin -- already the world's biggest arms company -- acquired in November 2015.
The defence ministry is also silent on whether the 24 NMRH will be bought in flyaway condition, like the 36 Rafale fighters contracted in 2016, or whether there is a Make in India component to the deal.
With the Navy's requirement for NMRH pegged at 123 helicopters for the entire fleet, it is feasible to buy the initial 24 in flyaway condition, with the remaining 99 helicopters built in India. Contacted for a clarification, the defence ministry did not respond.
Artillery guns
In a badly-needed fillip to Army firepower, the DAC approved the manufacture of 150 indigenously designed and developed Advanced Towed Artillery Gun Systems (ATAGS) at an approximate cost of Rs 33.65 billion.
These guns, which the ministry terms "the mainstay of artillery in the near future" are being procured under the "Make – Indigenously Designed, Developed and Manufactured (IDDM)" category. The Defence Research and Development Organization (DRDO) has overseen their development and two private firms will build the guns in parallel -- the Kalyani Group and Tata Power (Strategic Engineering Division).
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The plan is to eventually induct about 1,500 ATAGS. The current order is a preliminary batch that will be used to continue gun development.
Finally, the DAC cleared the procurement of 14 Vertically Launched Short Range Missile Systems that will boost the capability of warships to shoot down and destroy incoming anti-ship missiles.