Push for greater indigenisation: MoD announces drastic changes in defence procurement

In another push for greater indigenisation of defence procurements, the Ministry of Defence has announced major changes in the procedure. The forces will have to acquire military hardware from the domestic industry as part of a modernization effort, with imports being the exception. The ministry has agreed to waive the Integrity Pact Bank Guarantee (IPBG) requirement in order to minimise the financial burden on the Indian defence industry and promote local manufacturing.

Earnest Money Deposits (EMDs) will be used as bid security in all acquisition cases costing more than 100 crores, according to the statement. In an official statement, the Ministry said, "Going forward all modernisation requirements of the defence services and Indian Coast Guard are to be indigenously sourced irrespective of the nature of the procurement."

It further stated that the import of defence equipment and sourcing them from the foreign industry as part of capital acquisitions should only be done as a last resort and only with the consent of the defence acquisition council or the defence minister.

Encouragement of local manufacturers

The entire order quantities in acquisition instances will be distributed between shortlisted suppliers, wherever feasible, to encourage broader involvement and a broad foundation of indigenous defence manufacture in the country, according to the ministry.

"Further, the other technically qualified bidders who have not been awarded contract will be issued a certificate by the services indicating that the product has been successfully trial evaluated, to facilitate vendors to explore other markets," it stated.

The defence ministry has also resolved to shorten the time it takes for projects to be approved under the iDEX framework. The iDEX initiative, which was introduced in 2018, is an ecosystem that engages innovators and entrepreneurs to stimulate innovation and technology development in the defence and aerospace sectors.