India Plans to Boost Its Industry through New Defence Policy

In an apparent attempt to engage domestic players into its main stream of defence production, India has released the new Defence Procurement Procedures (DPP) that would enable the Indian firms to make an entry through ‘Buy and Make’ policy. It also makes India a potential defence market for joint ventures (JV) which would ultimately help foreign companies to reduce cost of production as India is famed for highly skilled cheap workforce.

The new procedure, to be effective from November 01, 2009 will allow Indian industries with necessary credentials to absorb technology and undertake indigenous manufacture under a new category ‘Buy and Make’. It will be similar to the existing ‘Make Procedure’ clause with a vital difference that the production and development by Indian industry will be through transfer of technology but not by Research and Development.

However, under the present procedure, the issuance of Request for Proposal (RfP) is only to overseas companies but the new one is extended to domestic firms too. While providing RfP to Indian firms it will allow the domestic players to directly participate in the defence manufacturing process of the country.

According to a Ministry of Defence (MOD) of India release, the Defence Minister AK Antony said the move was primarily aimed at encouraging pro-active participation by the Indian industry who could establish JV/Production arrangements with any foreign manufacturer. Through this procedure the MOD aims to indigenize its defence needs while having plans to spend $100bn as defence outlay in the next 10 years.

The declaration by the defence minister gave emphasis to matters including the 15-year armed forces acquisition plan to be made public through Request for Information on its official website in all such cases. Antony said the twin objectives of DPP 2009 intend at promoting and facilitating wide participation of defence Industry, while enabling transparency and integrity in all acquisitions.

Antony expressed hope that these changes would bring in greater degree of probity in the procedure, and also encourage domestic defence industry to develop. He asked defence personnel to keep an eye on the ‘quality’ with the ‘end users’ in mind, and to allow widest range of competition to ensure value for money. He also urged them to guarantee the completion of the whole cycle to be within a stipulated time frame to avoid undue delays, often experienced.

By Jose Roy