New DPP goes easy on pvt sector, foreign players

NEW DELHI: With weapons purchases estimated to touch a staggering USD 30-50 billion over the next five years, India on Friday unveiled a new defence procurement procedure (DPP) that eases licensing conditions for private sector and allows foreign players to bank offsets on contracts.

The policy focuses on speedy acquisitions of advance weapons system as well as "full transparency" in purchases. Besides, it promises vendors advance information on procurements before floating tenders, enhances financial powers for capital acquisition of army, navy and air force headquarters and also that of the Defence Secretary.

Releasing the much-awaited DPP-2008, Defence Minister A K Antony said the provision to bank offsets was introduced to secure greater engagement of global industries in promotion of Indian defence industry.

Under the offset policy, all foreign firms have to invest 30-50 per cent of the contract value in India on all deals of more than Rs 300 crore.

This policy now stands revised with foreign multinational companies allowed to park money with banks in anticipation of future contracts, so that they need not have to manage money for the offset policy when the deal is clinched.

The companies have been given leverage to discharge the banked offset credits in lieu of request for proposals (RFP) within two financial years from the date of approval.

It also allows foreign companies to create surplus offset credits which would remain valid for the subsequent two financial years after the conclusion of the contract.