Monday 16 May 2022, 06:10 PM
Simplified Make II will change Indian weapon market
By Sushil Sharma | Bharat Defence Kavach | Publish Date: 10/26/2018 4:50:59 PM
Simplified Make II will change Indian weapon market

The first project under the strategic partnership model (SP-Model) will be the one to make 111 naval utility helicopters. On August 25, the Defence Acquisition Council chaired by the Defence Minister Nirmala Sithraman approved procurement of 111 Naval utility helicopters (NUH) for the Indian Navy at a cost of over Rs 21,000 crore. This is the first project under the Ministry of Defence (MoD) launched SP-Model that aims at providing significant fillip to the government’s ‘Make in India’ programme.

SP Model envisages indigenous manufacturing of major defence platforms by an Indian strategic partner, who will collaborate with foreign OEM, acquire niche technologies and set up production facilities in the country. The model has a long-term vision of promoting India as a manufacturing hub for defence equipment thus enhancing self-sufficiency and establishing an industrial and Research and Development ecosystem, capable of meeting the future requirements of the Armed Forces.The MoD has okayed making of helicopters, fighter jets, submarines and armoured fighting vehicles/Tanks under this project.
All existing Request for Information (RFI) –the first step of the tendering process – have been issued under the SP-model. Besides the 111 NUH, these include the RFI for 110 fighters jets, 123 naval multirole helicopters and the 75-India project for submarines. Apart from these the 200 Kamov-226T  copters are being made under a joint venture between Kamov and Hindustan Aeronautics Limited (HAL). 

The SP Model progress:
Ending almost two years of wait, the MoD in June this year okayed the implementation guidelines for the SP-Model. It aims to progressively build indigenous capabilities in the private sector to design, develop and manufacture complex weapon systems for the future needs of the Armed Forces. The amplifying guidelines lay emphasis on incentivisation of transfer of niche technology and higher indigenous content.This move of the MoD converted the policy into implementable directions. The projects will be executed by a specially constituted Empowered Project Committees (EPC) to provide focussed attention and ensure timely execution.
How it will work: To allay fears that the MoD may favour one company over another, the selection of SPs and their foreign OEM partners would be based on a competitive process to be undertaken simultaneously. The main criteria for the selection of OEMs would be the compatibility of their products with the Services Staff Qualitative Requirements (SQRs), and their commitment to provide technology and other assistance to enable their Indian partners to produce in India with maximum indigenisation. Parallel to the shortlisting of OEMs, the MoD would also identify a list of Indian companies in each segment based on certain technical, financial and infrastructure-related parameters. 
According to the guidelines stipulated in the new Chapter VII of DPP 2016, any applicant company interested in participating in the selection process for strategic partners must be owned and controlled by resident Indians. This means that the majority in a company’s board of directors, including the Chief Executive Officer (CEO), must be resident Indians, and that a minimum 51 per cent of its equity must be owned by resident Indians. The cap of a maximum of 49 per cent Foreign Direct Investment (FDI) in SPs, which is also the condition in the newly revised ‘Make’ procedure, is intended to keep the crucial decision-making and intellectual property rights (IPR) in the hands of resident Indians.
Potential Benefits: The SP model is likely to have a number of benefits for both the private sector and the larger Indian defence industry. From the private sector’s point of view, the biggest benefit would be the opportunity to participate in some big ticket contracts – estimated to be worth over two lakh crore rupees in the initial phase of execution -- which were hitherto reserved for the DPSUs and OFs. At the same time, the model would also go a long way in bridging the long-standing trust gap between the Indian private sector and MoD, with the latter perceived to be friendlier toward public sector entities.
Further, strategic partners, being private sector companies, are expected to exploit their dynamism, competiveness, profit orientation, and exposure to the civilian sector for efficient utilisation of the technology, manpower and infrastructure developed in the process. Moreover, given that future orders would not be awarded automatically after the initial contract, it is in the interest of SPs to constantly improve upon their competitiveness and core expertise. This aims at development of competitiveness and expertise to compete and win future contracts.
Simplified ‘Make-II’:  The MoD in January this year cleared a simplified ‘Make-II’ procedure which will enable greater participation of industry in acquisition of defence equipment. This process will greatly help import substitution and promote innovative solutions. This simplified ‘Make-II’ procedure was an amendment to the existing ‘Make Procedure’ in Defence Procurement Procedure (DPP)-2016.
The revised procedure has been finalized after a series of consultations held with industry. The salient features of the new ‘Make-II’ procedure include the following: The industry can suggest projects, especially among those items which are currently being imported. Start-ups or individuals can also suggest proposals. Service Headquarters will also list out a series of projects which can be undertaken as ‘Make-II’ projects under the new procedure.
The potential ‘Make-II’ projects will be approved by a collegiate comprising of DRDO, HQ (IDS), Department of Defence under a committee chaired by Secretary (Defence Production). Based on the in-principle approval agreed by this committee, the projects will be hosted on Ministry of Defence/Department of Defence Production’s website inviting industry to participate.
There will be no limit to the number of industry who may respond to the EoI for development of the prototype subject to meeting the minimum qualification criteria. The design and development time of 12 to 30 weeks is granted to industry to offer the prototypes.There is no limit to the number of industry players who may show interest and offer prototype. After this period, a commercial RFP will be issued. Once the RFP is issued, it shall not be retracted. The industry who wins the bid, is assured of an order.
Service Headquarter (SHQ) will constitute a Project Facilitation Team for facilitating the process under this procedure.The case will be progressed even if there is single entity offering an innovative solution.The industry that develops the product will retain the title and ownership and all other rights in intellectual property. However, for some specified reasons like National Security, Government shall have ‘March-in’ rights. Make-II’ procedure reduces the total time from in-principle approval to placing of order by 50 percent. The estimated time to finish the whole process has come down to 69 to 103 weeks. Projects involving developmental cost of less than three crores will be reserved for MSME.


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भारत डिफेंस कवच की नई हिन्दी पत्रिका ‘डिफेंस मॉनिटर’ का ताजा अंक ऊपर दर्शाया गया है। इसके पहले दस पन्ने आप मुफ्त देख सकते हैं। पूरी पत्रिका पढ़ने के लिए कुछ राशि का भुगतान करना होता है। पुराने अंक आप पूरी तरह फ्री पढ़ सकते हैं। पत्रिका के अंकों पर क्लिक करें और देखें। -संपादक

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