India has now the option to lease critical military equipment, says Rajnath Singh

By: |
March 20, 2020 7:03 PM

In a Draft Defence Procurement Procedure 2020 which was unveiled by the defence minister Rajnath Singh, a new clause which allows `leasing’ has been introduced under which equipment including warships, transport aircraft can be leased.

Rajnath Singh, Ministry of Defence, DPP, Strategic Partnership model, FDI, INS Chakra, Larsen &TurboTo further support Make in India Initiative, the indigenous content in various categories of procurement has been enhanced.

For the first time ever, Ministry of Defence comes with a provision which allows formal leasing of critical equipment from a friendly nation. In a Draft Defence Procurement Procedure 2020 which was unveiled by the defence minister Rajnath Singh, a new clause which allows `leasing’ has been introduced under which equipment including warships, transport aircraft can be leased.

This is altogether a new category for acquisition to existing ‘buy and make’ categories. Under two sub-categories leasing will be allowed — Lease (Indian) and Lease (global).

Last August a review committee was constituted to revise the existing DPP-2016.

The last time amendments were made to the DPP was in 2016. Based on this the revised draft of DPP 2020 has been prepared which is now put out in public domain which according to the minister includes “Simplified procedure; timeline has been reduced as this would ensure probity, transparency and accountability. Also, life cycle support of procured equipment and platforms has been given more attention.”

Talking about the Strategic Partnership (SP) model, the minister said that the introduction of the SP model helped in building capabilities of the private sector and a new category of Buy was introduced in 2016.

The draft DPP-2020 is expected to strengthen the private industry through Make in India initiative and this will help in making India a global hub.

To further support Make in India Initiative, the indigenous content in various categories of procurement has been enhanced.

Sharing details of the changes that have been introduced in the draft DPP-2020, Director General (Acquisition) Apurva Chandra told the media that “The provision for leasing has been introduced for the first time as another category.

A new category Buy (Global-Manufacture in India) has been introduced under which outright purchase of equipment from foreign vendors is allowed. On the cost basis of the total contract value, it should have 50 per cent indigenous content and the balance has to be manufactured in India.

According to Chandra “Revised defence offset guidelines have also been proposed and this will help in attracting investments not only in the defence manufacturing but also in the Defence Industrial Corridors (DIC) through FDI or direct investment.”

Projects under SP Model

The most important project under SP model is Project-75(I) – building submarines for the Indian Navy through the transfer of technology.

Mumbai based Mazagon Docks Ltd (MDL) and Larsen &Turbo (L&T) have earlier this year been approved by the Ministry of Defence as the Indian Strategic Partners (SP) and are now competing to be selected for the construction of the submarines.

Has India ever leased before?

In the past India has leased various equipment from friendly countries likely Russia.

In 2012, the Indian Navy leased nuclear-powered submarine INS Chakra into its fleet from Russia. This was possible due to the level of cooperation and strategic partnership between the two countries.

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