Subhashis Mittra
The Defence Ministry has finalised a muchawaited policy under which private sector companies will be roped-in to manufacture hi-tech defence equipment like submarines and fighter jets in India in partnership with foreign entities. The Defence Acquisition Council (DAC), which met under the chairmanship of Defence Minister Arun, gave final touches to the new defence policy. The ‘strategic partnership model’ is aimed at creating a vibrant defence manufacturing ecosystem in the country through involvement of both major Indian corporates as well as Micro, Small and Medium Enterprises. Initially, the policy is expected to be implemented for manufacturing fighter aircraft, submarines and armoured vehicles. It is expected to be expanded to other segments at a later stage.
India still imports 65% of its military requirements and can be strategically choked by foreign powers in times of conflicts. The policy is likely to be examined by the finance ministry before being considered by the Cabinet Committee on Security. The policy is also being seen as a clear message to the DRDO and its 50 labs, five defence PSUs, four shipyards, and the 41 factories under the Ordnance Factory Board (OFB) that they have largely failed to deliver the goods over the decades. However, due to the stiff resistance put up by
the public sector lobby against the policy, defence
PSUs, shipyards and OFB will also be eligible to compete with private sector companies for selection as strategic partners in the submarine and armoured vehicle segments.
The policy envisages establishment of longterm strategic partnerships with Indian defence majors through a transparent and competitive process wherein they would tie up with global original equipment manufacturers (OEMs) to seek technolog y transfers to set up domestic manufacturing infrastructure and supply chains.
It will give a boost to the ‘Make in India’ policy in the defence sector and set Indian industry on the path to acquiring cutting-edge capabilities which will contribute to building of self- reliance in the vital sector.
Under the much-awaited policy, select private firms will be roped in to build military platforms like submarines and fighter jets in India in partnership with foreign entities. This is being seen as a major initiative as the ‘strategic partnership model’ aims to create a vibrant defence manufacturing ecosystem in the country through involvement of both the major Indian corporates as well as the MSME sector.
A meeting of the Defence Acquisition Council (DAC), the top decision making body of the Defence Ministry, gave the go-ahead to the ‘strategic partnership model’ after lengthy deliberations. The finer details of the new model are yet to be finalised and appropriate institutional mechanisms will be set in place to implement the policy.
“Breaking new ground, the DAC under the chairmanship of Defence Minister, Arun Jaitley, today finalised the broad contours of a policy aimed at engaging the Indian private sector in the manufacture of high-tech defence equipment in India,” the defence ministry said in a statement. Initially, the policy is expected to be implemented for manufacturing fighter aircraft, submarines and armoured vehicles. It is expected to be expanded to other segments at a later stage.
The policy is likely to be examined by the finance ministry before being considered by the Cabinet Committee on Security. The Defence Ministry said the policy envisages establishment of long-term strategic partnerships with Indian defence majors through a transparent and competitive process wherein they would tie up with global OEMs to seek technology transfers to set up domestic manufacturing infrastructure and supply chains. Strategic analysts said the policy will give a boost to the ‘Make in India’ policy in the defence sector and set Indian industry on the path to acquiring cutting-edge capabilities which will contribute to building of self-reliance in the vital sector. Referring to sectors identified to implement the policy, it said additional segments may be added in future.
Jaitley recently met representatives of defence arms of leading groups including Larsen and Toubro, Ashok Leyland, Mahindra and Mahindra, Reliance Infra, Tata Group, Punj Lloyd, Adani Group and Bharat Forge Ltd. At that meeting, some industry representatives had favoured a level playing field and expanding the industry base by allowing entry of new players. Some officials had raised concern about possible “judicial intervention and federal audit” in case of award of successive orders to one ‘strategic partner’. The ‘strategic partnership model’ was proposed by the Dhirendra Singh Committee in July, 2015.
It had said that for the ‘Make in India’ initiative to become wider in the defence sector, the government should adopt a strategic partnership model, whereby a private firm is chosen for the development of a specific identified platform. Last year, the then defence minister Manohar Parrikar had announced that the policy on the model would be unveiled soon. (PTI)
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