The government plans to set up a Defence Procurement Organisation (DPO) to integrate and streamline the long and arduous process of defence acquisitions.
Report on DPO
A government appointed committee, headed by former Director of Indian Institute of Management (IIM) has submitted a report on the modalities of setting up the DPO.
Need for DPO
The Defence Procurement Process, which applies to all defence capital procurements, has been modified several times to bring in transparency and speed up acquisitions but it continues to be lengthy and complicated.
More delegation of powers in defence procurement
To shorten the procurement cycle, the Cabinet Committee on Security (CCS), chaired by the Prime Minister has increased the financial powers of the Defence Minister.
1. In the past, the Defence Minister was entitled to clear deals up to Rs.500 crore, which has now gone up to Rs.2,000 crore.
2. Jointly, the Finance Minister and the Defence Minister can approve projects up to Rs.3,000 crore, up from the earlier Rs.1,000 crore.
3. The Defence Secretary too has now been given financial powers upto Rs.500 crore to clear deals, ensuring that a major chunk of the procurements are approved within the Ministries.
About 70% of the deals by number are below Rs.3,000 crore. So now only deals of Rs.3,000 crore and above would go to the CCS for approval.