Boost to Defence Sector


The prolonged monopoly of the public sector defence laboratories has stifled the growth of defence manufacturing in the country and spawned a bureaucratic culture that kept private players at bay in strategic areas. Time has now come to break the new ground and tap the full potential of the sector by involving private industry as an equal partner. India needs to upgrade its defence infrastructure and manufacturing equipment at home to save precious foreign exchange, cut procurement delays and generate jobs. The Defence Ministry’s approval of the long-awaited Strategic Partnership (SP) policy to boost private sector’s role in production of cutting-edge weapon systems through strategic ventures is a step in the right direction. The new policy has cleared the decks for private sector to build military equipment such as fighter jets, submarines and armoured vehicles in India. It will give a major fillip to the “Make in India” initiative of the Government. India is the world’s largest importer of major arms, accounting for 13 percent of the total global sales between 2012 and 2016, according to Stockholm International Peace Research Institute (SIPRI). While China is increasingly able to substitute arms imports with indigenous products, India remains dependent on weapons technology from foreign suppliers like Russia and USA. Currently, India imports 70 per cent of its requirement in value terms. Indigenisation of the defence equipment through strategic partnership route is the way forward to reduce dependence on imports.

The new policy, cleared by the Defence Acquisitions Council (DAC), envisages opening up four major segments—fighter jets, helicopters, submarines and armoured vehicles—for private sector. This is the first major step towards building a robust domestic defence-industrial base. The policy will now go to the Cabinet Committee on Security for final approval. The bitter truth is that 50 laboratories of the State-owned DRDO, five defence PSUs, four shipyards, and the 41 factories under the Ordnance Factory Board have been unable to meet the requirement of the armed forces with a majority of their projects being bogged down by inordinate delays. Under the new policy guidelines, they will be allowed to compete with private companies for selection as strategic partners through a transparent and competitive process. The private players see a huge business opportunity in the days ahead in the areas of advanced weapon platforms and military hardware to meet the requirements of the Navy, Air Force and the Army. They can tie up with global Original Equipment Manufacturers (OEM) to seek technology transfers and manufacturing know-how to set up domestic manufacturing and supply chains. The new approach will set the Indian industry on the path to acquire cutting-edge capabilities and contribute to the building of self-reliance in the national security sector.