Indian Economy News

The Defence procurement Council has approved capital procurement bids totaling Rs. 2.23 lakh crore (US$ 26.75 billion) for armed forces' operational capability

Under the direction of Raksha Mantri, Mr. Rajnath Singh, the Defence Acquisition Council (DAC) approved on November 30, 2023, the Acceptance of Necessity (AoNs) for a total of Rs 2.23 lakh crore (US$ 26.75 billion) in capital acquisition proposals, of which Rs 2.20 lakh crore (US$ 26.39 billion) will come from domestic industries. The Indian defence industry would benefit greatly from this as it works towards realising "Aatmanirbharta."

The AoN has been granted permission by the DAC to purchase two types of anti-tank munitions, known as Area Denial Munition (ADM) Types 2 and 3, which can neutralise enemy personnel as well as tanks and armoured personnel carriers. AoN has been granted permission to purchase a state-of-the-art Towed Gun System (TGS), which will replace the Indian Field Gun (IFG), which has reached the end of its useful life. The TGS will become a mainstay of the Indian Army's artillery units. Additionally, the AoN was granted for the 155 mm Nubless projectile, which will increase the projectiles' lethality and safety when used in 155 mm artillery weapons. The Indian Army will purchase all these pieces of gear under the Buy (Indian-IDDM) category.

To keep T-90 tanks' combative advantage over enemy platforms, the AoN for the purchase and integration of Automatic Target Tracker (ATT) and Digital Basaltic Computer (DBC) for T-90 tanks under the buy (India) category has also been granted. The Indian Navy's surface platforms have been granted the authority to purchase Medium Range Anti-Ship Missiles (MRAShM) under the Buy (Indian-IDDM) category. The MRAShM is intended to be the principal offensive armament on Indian Naval Ships and a lightweight surface-to-surface missile.

Furthermore, the Indian Army and Air Force (IAF) were granted AoNs by the DAC to purchase Light Combat Helicopters (LCH) and Light Combat Aircraft (LCA) Mk 1A from Hindustan Aeronautics Limited (HAL) under the Buy (Indian-IDDM) category. The DAC has also granted the AoNs for the in-house Su-30 MKI aircraft upgrade from HAL. Although acquiring these weapons will provide the IAF with great strength, obtaining them from homegrown defence companies will raise the level of indigenous capacity. Additionally, it will significantly lessen reliance on foreign Original Equipment Manufacturers (OEMs).

The Defence Acquisition Procedure (DAP) 2020 has undergone a significant modification that has received clearance from the DAC in an effort to maximise indigenisation. It has been agreed that going forward, materials, components, and software that are made in India must comprise at least 50% of the indigenous content in all categories of procurement cases. The cost of an Annual Maintenance Contract (AMC), Comprehensive Maintenance Contract (CMC), or an after-sale service will not be included in the computation of indigenous content. Additionally, the DAC has decided to promote MSMEs' and startups' involvement in the defence ecosystem even more.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.