Strategic Partnership Policy Proposed

Context: Defence ministry has unveiled the Strategic Partnership (SP) policy. This policy is a part of the Defence Procurement Procedure (DPP). 

What are the objectives of this policy?

  • To reduce current dependence on imports.
  • To bolster defence manufacturing in India through indigenous private defence firms.
What are the salient features of this policy?
  • The SP model will initially be applicable in four segments: Submarines, Helicopters, Fighter Aircraft and Armoured fighting vehicles (AFV)/Main Battle Tanks (MBT). 
  • Only one Strategic Partner will be selected per segment having 51% ownership. 
  • The Strategic Partner will play the role of a System Integrator.
  • Strategic partner will be selected will be based on criteria of inherent capacity and ability of the vendor to emerge as a systems integrator and to set up a vendor network for sourcing.
  • The chosen SP will enter into tie-ups with foreign original equipment manufacturers (OEM). 
  • The SP and OEM will jointly supply the required platforms to the armed forces. 
  • To ensure ‘Make in India’, only a minimum number of platforms, not exceeding 10-15 per cent of the number of units being procured, can be manufactured in the OEM’s premises. 
About Defence Procurement Procedure (DPP)-2016 policy
  • The objective of the policy is to Institutionalise, streamline and simplify defence procurement procedure to give a boost to “Make in India” initiative.
  • Salient features of the policy:
  • A new category of procurement ‘Buy {Indian-IDDM (Indigenously Designed, Developed and Manufactured)}’ has been introduced in Defence Procurement Procedure-2016. This category has been accorded top most priority for procurement of capital equipment. 
  • Preference has been accorded to ‘Buy (Indian)’ and ‘Buy and Make (Indian)’ categories of capital acquisition over ‘Buy (Global)’ & ‘Buy & Make (Global)’ categories.
  • Requirement of Indigenous content has been enhanced / rationalised for various categories of capital acquisition.
  • DPP 2016 also provides greater impetus to the MSMEs, with certain category of „Make‟ projects reserved exclusively for them. There are also other provisions and procedural measures that have been introduced to make the procurement process more efficient and effective.
  • The ‘Make’ Procedure has been simplified with provisions for  funding of   90 % of development cost by the government to Indian industry and reserving projects not exceeding development cost of Rs. 10 crore (government funded) and Rs. 3  crore (industry funded) for MSMEs.