Home / News / India /  Rajnath releases new DRDO procurement manual to engage private sector

NEW DELHI: Defence Minister Rajnath Singh on Tuesday released a new version of the procurement manual of the Defence Research and Development Organisation (DRDO) that lists simplified rules for forging partnerships with the private sector for research and development projects.

Defence ministry officials have said the new version of the manual has been envisaged to encourage participation of private industry, including start-ups and micro, small and medium enterprises in defence research in sync with Prime Minister Narendra Modi’s “Atmanirbhar Bharat’ (self-reliant India) initiative. The previous revision of the procurement manual of the DRDO was in 2016.

The government has already announced its vision to make India a global hub of defence manufacturing and launched a series of reform measures to encourage the domestic defence industry.

"The procurement manual-2020 will facilitate faster execution of R and D projects and programmes. The modified features in the manual will go a long way to facilitate participation of industry in various R&D projects," the defence ministry said in a statement.

Some of the salient features of the new manual include increase of threshold limit for advance payment, placement of order on second lowest bidder (L2) in case lowest bidder L1 backs out and 'bid security declaration option' for depositing earnest money.

Several other enabling measures are exemption of bid security and performance security of up to 10 lakh and not having negotiations for commercial off-the-shelf (COTS) items and services where price discovery takes place by market forces, a defence official said.

The process for extension of the delivery period has been simplified for faster decision making and many of the internal procedures have been further simplified for deeper engagement with industry, the official said.

In May, Finance Minster Nirmala Sitharaman announced a number of reform measures for the defence sector including making separate budgetary outlay to procure Indian-made military hardware, increasing FDI limit from 49 % to 74 % under the automatic route and generating a year-wise negative list of weapons which will not be allowed to import.

India is one of the most lucrative markets for global defence giants as it figured among top three importers of military hardware in the world for the last eight years.

According to estimates, the Indian armed forces are projected to spend around USD 130 billion in capital procurement in the next five years.

The government is eyeing a turnover of 1.75 lakh crore ($25 billion) in defence manufacturing by 2025.

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