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Defence ministry to review No Cost No Commitment trials to increase MSME participation

Trade, import and export for MSMEs: The move will allow MSMEs, startups to participate in bidding. The Ministry of Defence has invited suggestions from the industries.

Trade, import and export for MSMEs: The Ministry of Defence is contemplating to review the ‘No Cost, No Commitment’ trial, where the government neither bears the cost of trials nor is obliged to purchase the equipment post-trial, to offer a level playing field for small businesses and start-ups in the defence sector.

The move will encourage micro, small and medium enterprises and start-ups in the business sector to apply for the bids by the ministry.

After the concerns raised by the businesses in the defence sector, the defence ministry has asked the industry about their take on the matter and suggestions to make the system more inclusive.

Colonel Sumit Kapur, Director B in ADG Acquisition Tech (Army), wrote to the defence industry stating “a study is being undertaken by this office to analyse the suitability of ‘No Cost, No Commitment (NCNC)‘ trials in the present Defence Capital Acquisition process”, reported The Hindu Business Line. 

The stakeholders were asked to share their feedback and suggestions to improve the existing system or even suggest a completely new procedure by August 7.

However, the Defence Acquisition Procedure 2020, the latest revised manual, continues to pitch for the NCNC trial for procurement of defence equipment.

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The Society of Indian Defence Manufacturers (SIDM), a not-for-profit association by industry body CII governing too had highlighted the need for doing away with the NCNC trials.

According to the Hindu Business Line, foreign defence equipment supplier company had recommended the government to bear the expenses of the companies after they move forward through the technical bid. “What the government could do is to take care of expenses of the companies after they qualify for the technical bid because from that stage onwards the only important aspect remains is that of opening the financial bid and declaring L1,” they had said.