By Ajai Shukla
Business Standard, 17th Jan 18
In an initiative that is being welcomed by small private defence firms, Raksha Mantri Nirmala Sitharaman on Tuesday simplified the “Make II” procedure, which is a framework for defence firms to develop and build equipment the military has announced it wants.
The “Make I” procedure is aimed at large, expensive projects like the Future Infantry Combat Vehicle. It provides for private industry consortia to develop such platforms, with the ministry reimbursing up to 90 per cent of the cost incurred.
In contrast, “Make II” is an industry-funded initiative for small projects that do not incur a heavy development cost. It allows private companies to develop equipment that the military has publicly stated it requires, in a document called the “Technology Perspective and Capability Roadmap” (TPCR), which is posted on the defence ministry website.
Now, aiming to make the “Make II” process more practical for private firms, the Defence Acquisition Council (DAC) announced it has “simplified the procedure to make it industry friendly, with minimal government control.”
“The salient aspects of the revised procedure will now allow Ministry of Defence to accept suo-motu proposals from the industry and also allows start-ups to develop equipment for Indian Armed Forces”, said the announcement.
The first change involves broadening the playing field and allowing more companies access. While the earlier “Make II” procedure provided for shortlisting only two vendors to develop prototype equipment, now multiple vendors can participate.
The second change involves relaxing the eligibility criteria for private firms to participate in prototype development projects. According to the ministry, “The minimum qualification criteria to participate in ‘Make II’ projects has been relaxed by removing conditions related to credit rating and reducing financial net worth criteria.”
Thirdly, the “Make II” procedure has been simplified and decentralised. “The vendor will not be required to submit Detailed Project Report. After accord of approval… [by the DAC], all clearances will be accorded at Service HQ (SHQ) level”, announced the MoD.
To hand-hold small scale firms and start-ups that might be technologically gifted but managerial novices, “SHQs will now setup project facilitation teams to act as the primary interface between the SHQ and the industry during the design and development stage. These teams would provide technical inputs, trial infrastructure and other facilities as required by the vendor”, announced the MoD.
Service headquarters have now been given greater flexibility. “Even if a single individual or firm offers innovative solutions, the SHQ will now have the option to accept and process the vendor’s development initiative. SHQs will be allowed to hire domain experts/consultants from private sector to increase outreach and enhance awareness among the industry”, the DAC decided.
Finally, the DAC addressed the biggest bugbear for private firms, which is that even successful design work sometimes does not bring in orders for the product they have developed. The DAC decided today: “Most importantly, there will be no foreclosure of project after the project is sanctioned, except on default by the vendor, to ensure that the successful vendor has assured orders.”
Private defence industry has welcomed these announcements. “These changes are in line with what industry has been requesting. We are hopeful the ministry will implement these changes quickly and kick off the first “Make II” project within a few months to build confidence within industry”, says Jayant Patil, who heads the heavy engineering division in L&T.