The Indian government on Monday issued an official statement in which it said all modernization requirements of the armed forces would be met indigenously to encourage “self-reliant India” in defense manufacturing and to reduce the financial burden on local industry.
The statement further mentioned that the domestic industry will not have to furnish “Integrity Treaty Bank Guarantee” for acquisition cost more than 100 crores.
These were among the major changes brought about by the amendment to the Defense Acquisition Procedure (DAP) 2020, based on the approval given by the Defense Acquisition Council (DAC) – India’s apex defense procurement body,
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“Going forward, all modernization requirements of the Defense Services and the Indian Coast Guard are to be sourced indigenously, irrespective of the nature of procurement. import of defense equipment/ Sourcing of capital acquisition from foreign industry should be an exception only and should be done with specific approval of DAC / Defense Minister,” the Defense Ministry said in a statement on Monday.
The requirement of “Integrity Compromise Bank Guarantee” has been done away with on the advice of the Ministry of Finance while maintaining safeguards to prevent wrongdoing in the defense business. An integrity agreement prohibits giving or receiving bribes and bank guarantees can be encashed by the government in case of breach.
“Instead, Earnest Money Deposit (EMD) will be taken as bid security for all acquisition cases in which Acceptance of Requirement (AON) exceeds the cost. 100 crores. The EMD will be valid for the selected vendor till the signing of the contract and will be returned to the remaining vendors after declaration of selection. After contract, integrity agreement [to check corruption] The performance cum warranty will be covered by way of Bank Guarantee (PWBG),” the statement from the ministry said.
Under India’s Defense Procurement Rules, the AON is the first step towards procuring military hardware by the Defense Acquisition Council.
The Defense Ministry will also encourage wider participation of indigenous defense manufacturing sector in the procurement process to promote “self-reliance”.
“In order to encourage wider participation and broad base indigenous defense manufacturing sector in the country, the total order quantity in cases of acquisition is to be apportioned among the shortlisted vendors, wherever feasible,” the statement said.