'Buy Indian, Make Indian' Procurement/ Production Renewed Thrust

Indian Defence Industry is poised to witness major policy changes. The first ever Defence Production Policy is likely to be unveiled soon and major changes incorporated in the Defence Procurement Policy.

MoD, aims to have a strong defence industrial base in India. A country like India cannot indefinitely depend on foreign suppliers for majority of our equipments, the Defence Minister averred. At the moment 65-70 percent of the equipments are imported, this trend needs to be reversed.

New mantra is to be 'Buy Indian, Make Indian.' There is plenty of space and opportunity for the public and the private sector to contribute in this effort, coexist and thrive. "A growing nation like India, a nation aspiring for the membership of the Security Council, a place on the high table of the nations still depending heavily on foreign countries for supply of defence equipments is not good for us," he added.

Defence R&D needs to keep pace with the state-of-the-art technologies. Resources will not be the constraint.

Full Report: India’s Defence Minister hints at major policy changes in defence industry


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India – Russia Partnership

India possibly realises only Russia will be ready to supply it with some "sensitive" military hardware.

The expansive Indo-Russian defence partnership, which has already zoomed past $35 billion since the 1960s, marked a new high on Tuesday with the two nations inking the Preliminary Design Contract (PDC) for joint development of the fifth-generation fighter aircraft (FGFA). The PDC may be only worth $295 million but it will lead to India spending around $35 billion over the next two decades to induct between 250 and 300 of advanced stealth fighters from 2020 onwards in what will be its biggest-ever defence project. The Indian FGFA or "perspective multi-role fighter" will be based on the Russian single-seater FGFA Sukhoi T-50, a prototype of which is already flying, but will be tailored to the IAF requirements. The IAF wants a twin-seater FGFA powered by a new engine "with a higher thrust". India and Russia propose to market the FGFA to "friendly third" countries at a later stage.

India has consciously diversified its defence imports since the 1999 Kargil conflict, turning towards countries like Israel, France, UK and now increasingly the US. Israel, in particular, is snapping at the heels of Russia, notching up sales worth over $10 billion since Kargil.

Read More: India – Russia Partnership

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Defence Offset Policy Debate

Indian Defence Offset Policy is continuously evolving, as it should be. With the size of defence offsets due and desire of foreign vendors to partner more with the Private Defence Industry in India for obvious advantages, various defence policy researchers have been propounding liberlising the Policy to include areas that are complementary/supplementary to defence, and thus enhance country’s strategic needs in allied areas. The Govt. is not averse to this idea. MoD however has to discuss the changes pragmatically.

Svipja has always maintained that we must permit defence offsets, direct and indirect, in the Industry to consolidate our high-tech reach. May be we lay down certain % of offsets for direct and indirect; say 60:40. We also support multipliers and ToT for offset credits amongst few others discussed on this Blog earlier.

As per Business Standard , the following amendments to the offsets policy may come-up for discussion in a DAC/MOD Meeting on 15 Dec 2010:

• Liberalising the policy to permit indirect offsets in civil aviation and homeland security. Currently, vendors must discharge their offset obligations entirely within the defence industry.

• Expanding the definition of services that qualify as offsets. Currently, those that qualify for defence offsets are “maintenance, overhaul, upgradation, life extension, engineering, design, testing of defence products, defence related software or quality assurance services”. Many more are being considered, including training.

• Allowing transfer of technology to be eligible for offset credit. So far, the MoD has insisted it will pay upfront for technology, as a part of the main contract. Now, by providing technology as an offset, a vendor could discharge his offset liability.

• Permitting foreign vendors to invest ‘in kind’ in Indian defence industry. Presently, the policy permits ‘direct foreign investment’. Permitting investment in kind would allow vendors to claim as offsets the supply of goods and services, e.g. training simulators.

Full Report : Offset Policy Debate

We need to wait and watch, advocacy notwithstanding.

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