Defence Ministry Announces Major Changes In Military Acquisition Procedure To Promote 'Make In India'

The Centre now wants to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.

The government has taken a series of measures to promote domestic defence production (Getty Images)

New Delhi: Announcing major changes in India's defence acquisition procedure to promote 'Make In India', the Defence Ministry said on Monday that the armed forces would have to source military hardware under modernisation drive from the domestic industry and their import should only be an exception.

To boost domestic manufacturing, the ministry also decided to dispense with the requirement of the Integrity Pact Bank Guarantee (IPBG) to reduce the financial burden, PTI reported. It said Earnest Money Deposit (EMD) will be taken as bid security for all acquisition cases costing more than Rs 100 crore.

"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," the ministry said in a statement.

In the statement, the ministry said import of defence equipment and sourcing them from the foreign industry under capital acquisitions should only be an exception and undertaken with specific approval of the defence acquisition council or the defence minister.

"As advised by the Ministry of Finance and to reduce the financial burden on the Indian defence industry whilst maintaining financial safeguards, the requirement of Integrity Pact Bank Guarantee (IPBG) has been dispensed with," the ministry said.

"Instead, Earnest Money Deposit (EMD) will be taken as a bid security for all acquisition cases with Acceptance of Necessity (AoN) cost more than Rs 100 crore," it added.

The development comes as the government looks to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.

The Defence Ministry has set a goal of a turnover of $25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years, which includes an export target of $5 billion (Rs 35,000 crore) worth of military hardware, PTI reported.

To encourage wider participation of domestic defence manufacturing sector, the total order quantities in acquisition cases are to be split between shortlisted vendors, wherever viable, 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 said.

(With PTI inputs)