The Indian Government is planning to set up a new procurement body, Defence Procurement Organisation or DPO. The DPO will function under the Ministry of Defence
The new procurement body is aimed to integrate and streamline the long and arduous process of defence acquisitions. It will simplify the defence purchase procedure by integrating procurement processes.
Even after multiple modifications of the Defence Procurement Process, which applies to all defence capital procurements to bring in transparency and speed up acquisitions, the process continues to be lengthy and complicated. Hence the need of DPO is felt which can take care of this matter explicitly.
The new agency will be established based on the recommendation of the government-appointed committee on the modalities of setting up the DPO.
The committee was headed by Dr Pritam Singh, former Director of Indian Institute of Management (IIM) Lucknow and has submitted a report to Union Defence Minister Manohar Parrikar.
Earlier, the financial powers of Defence Minister and Defence Secretary were raised to clear defence deals.
The Cabinet Committee on Security (CCS) chaired by the Prime Minister has increased the financial powers of the Defence Minister to clear defence deals up to Rs 2,000 crore from earlier Rs 500 crore limit to shorten the procurement cycle.
Now only deals of Rs 3,000 crore and above would go to the CCS for approval. CCS also increased joint financial powers of Finance Minister and Defence Minister to approve projects up to Rs 3,000 crore, up from the earlier Rs 1,000 crore. The Defence Secretary also has been given financial powers up to Rs 500 crore to clear deals.