The ministry of defence (MoD) is looking to increase ‘Make India’ opportunities. It is expected to approve a tweak in policy at the next acquisition council meeting to make the option more attractive to the domestic industry. A source in MoD told FE: “The next meeting of the defence acquisition council next week, headed by defence minister Manohar Parrikar, will finalise and approve the ‘Make India’ category of the defence procurement procedure.”
“There will not be any dilution of the current category, rather it will be made easier to understand and more attractive for Indian vendors who are investing in high risk areas,” sources said.
In 2006, MoD had decided to follow the path to technological self-reliance by introducing the ‘Make’ procedure for indigenous design, development and production of high technology complex systems. In its wake, a few projects were identified to be undertaken as ‘Make’ projects. These included the Future Infantry Combat Vehicle, Tactical Communication System and Battlefield Management System projects. However, eight years later, there is little to show by way of results.
Realizing it was getting nowhere with the ‘Make’ projects, MoD announced in April 2013 that a high-level panel had been formed for simplification of the ‘Make’ procedure to ‘unleash the full potential of this important category”.
Last year, the MoD circulated a revised draft of the ‘Make’ procedure to industry associations, seeking feedback. “The ‘Make India’ and the new government’s ‘Make in India’ initiative are different. The current Make-in-India push of the government is an echo of MoD’s long-cherished aspiration for self-reliance in defence production. This was articulated in the Defence Production Policy of January 2011,” explained an official.
The defence projects under ‘Make’ category have to go through three phases. The first phase begins with identification of projects that can be categorised as ‘Make’ projects, followed by formulation of provisional services qualitative requirements, feasibility study of the project and finally acceptance of necessity.
Protection of intellectual property rights is one the most significant changes proposed. It is likely to be specified that IPR shall vest in the development agencies that develop the technology. However, MoD would retain ab-initio, irrevocable, transferable and fully-paid license in respect of the technology for its own use.
The revised ‘Make’ procedure could possibly go into great details in laying down principles to be followed for protection of IPR, the extent of government rights, including march-in rights, as also other aspects. This should address a major concern of the development agencies, including foreign collaborators.
The existing procedure provides for funding of ‘Make’ projects to the extent of 80% by MoD. This would remain unchanged but more elaborate guidelines are likely to be prescribed for funding of the projects through milestone-related payments based on principles of allowability, allocability and reasonableness of expenses claimed by development agencies as per the terms of the contract. Indian-industry initiated and developed projects is another clause that could be added to the amended category of ‘Make’.