DAC clears changes in defence procurement procedure to make it simpler

New Delhi, Jan 31 (IANS) The Defence Acquisition Council (DAC) chaired by Defence Minister Nirmala Sitharaman on Thursday approved significant changes in the Defence Procurement Procedure (DPP)-2016 to make it "industry friendly and simpler".

In a major change, the submission of bank guarantees from Indian private sector banks authorised by RBI in addition to all public sector banks has been approved.

The Defence Ministry said that this step would cut overhead costs of seller incurred while obtaining these guarantees from banks and enable faster financial transactions.

Another significant change is simplification of the best price determination process in which the latest government policies on GST and custom duties have now been taken into account in order to evaluate the lowest bidder.

The move gives advantage to the Indian vendors as it gives them an advantage in terms of duty as compared to foreign bidders.

The rules were last revised in in May last year.

The DAC also approved aligning the date of delivery with the date of advance payment instead of the date of contract.

"This entails that the seller has adequate mobilisation of funds available to him to commence production and ensure delivery on schedule," the Ministry said.

Changes have also been made to simplify "unwieldy aspects" of the procedure such as devolution of approval and vetting of reports.

"These measures are set to provide further impetus to the indigenous defence industry in the country as also encourage foreign industry to manufacture in India," it added.