A special meeting of the Defence Acquisition Council (DAC) headed by defence minister Manohar Parrikar later this week is likely to give the final approval to the Defence Procurement Procedure (DPP).

According to sources in the MoD, “Ahead of the DefExpo 2016 scheduled to be held later this month, the defence minister wants to approve the amended policy and the government’s policy on blacklisting defence companies”.

The government had earlier this year given its nod for two chapters of the much-awaited Defence Procurement Procedures (DPP) with an aim to boost Prime Minister Narendra Modi’s ‘Make in India’ initiative in the sector and provide a major role for private sector involvement in arms manufacturing.

Defence minister Manohar Parrikar, who had chaired the meeting of the DAC then, had said, “The notification of the new DPP-2016 will be issued in two months’ time, as some parts of the revised DPP such as the ‘strategic partners’ will have to be debated upon by the Central Cabinet and approved by it.”

He had also made it clear that the blacklisting policy was not a part of the DPP and will be issued separately. While there will be no clause for automatic blacklisting, action taken will be based on graded system against the defence manufacturer. Approval will also be for the agents, where companies will have to declare in advance the fees and the consultancy sought from the agent.

While the Atre committee report has also been submitted, the ministry is keen to approve the DPP before global defence manufacturers come for the DefExpo.

The new DPP aims to ease the procurement processes and give weightage to indigenous products in the acquisition process, apart from increasing the participation of the private sector with particular emphasis on micro, small and medium enterprises (MSME). It will also have a new category called the ‘IDDM’ or ‘indigenously designed, developed and manufactured’ platforms. This will get top priority and will be the first to be chosen for tenders. Besides that, this will have two sub-categories — one, it will be mandatory to have 40% local content in case the design is also indigenous; two, in case the design is not Indian, 60% local content will be mandatory.

While this change implies that there will be fewer offset contracts to be negotiated and the ones that do not entail offsets could be clinched faster, the smaller players who stood to gain more from the offsets will no more be able to benefit from a larger basket of offset contracts, experts observed.