Article Posted on : - Feb 17, 2016

MUMBAI (PTI): The Indian Defence Ministry said 79 units operated by 50 private companies have begun production after the government opened the defence equipment industry to private sector in 2001.

"Out of the 319 licences issued to 190 companies, 79 licences of 50 companies have entered production stage," Defence Secretary (Production) A K Gupta said at the 'Make in India' week here on Tuesday, adding most of these were operational for the past 18 months or so.

Of the 319 licences, 190 were in the past 18 months.

On the new Defence Procurement Policy (DPP), Gupta said as stated by Defence Minister Manohar Parrikar on Monday, it will be effective from April and will have a new offset clause which will give freedom to change the sourcing model as well as the local partner.

The official also said the DPP will drastically change bidding norms which currently give most weight to the cost.

"We will have more friendly and practically feasible bidding norm wherein the overriding criterion will not be the cost alone. We will also stress quality, safety and durability and after-sales and other features as wining conditions. The L1 will typically be not the winning element," he said.

Currently a company that quotes the lowest quote (L1) typically wins the contract.

On Tuesday Parrikar had said that by keeping the procurement system clean and transparent, the government could bring down costs by at least 20-25 per cent without compromising on quality and the DPP will reflect this.