India boosts private sector role in defence production

In a major shift in the country's defence procurement strategy, the Defence Acquisition Council, the highest decision making body for defence-related purchases, today finalised a policy to engage Indian private sector in the manufacture of high-tech defence equipment.

The new policy would allow Indian private sector companies to work with foreign players to make high-tech defence equipment, in a boost to Prime Minister Narendra Modi's `Make In India' initiative that aims to cut India's huge reliance on imported defence equipment.

The Defence Acquisition Council (DAC), headed by minister of defence Arun Jaitley, today finalised the broad contours of a policy for engaging Indian private sector in the manufacture of high-tech defence equipment in India. The policy is aimed at developing the defence industrial eco-system in the country through the involvement of both major Indian corporates as well as the MSME sector.

The policy, which was developed through extensive stakeholder consultations with Indian industry, envisages the establishment of long-term strategic partnerships with qualified Indian industry majors through a transparent and competitive process wherein the Indian industry partners would tie up with global OEMs to seek technology transfers and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains.

The policy is expected to boost the 'Make in India' programme in the defence sector and set Indian industry on the path to acquiring cutting-edge capabilities, which will contribute to the building of self-reliance in the vital sector of national security requirements, says a degfence ministry release.

The policy is initially expected to be implemented in a few select segments, namely, fighter aircraft, submarines and armoured vehicles. In future, additional segments may be brought in. Appropriate institutional mechanisms will also be set in place to implement the policy.

"In future, additional segments will be added," the statement said.

Industry experts have said that delays in finalising procurement deals have undermined India's efforts to get local companies to tie up with foreign manufacturers and utilise the latest technology.

Prime Minister Modi has vowed to reverse India's dependence on imports by building a local manufacturing industry. The government is reported to have targeted $250 billion spending on modernisation of its armed forces over the next decade.

The policy, announced on Saturday, would allow Indian companies to partner with global defence majors "to seek technology transfers and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains," according to the ministry's statement.