Defence manufacturing and sourcing continue to be dominated by the public sector units and Ordinance Factory Board
Defence Minister Arun Jaitley calling a meeting of defence industry stakeholders on May 11 to finalise the norms for strategic partners, a key component of the Defence Procurement Procedure 2016 policy is a welcome relief for the private sector waiting to enter defence manufacturing and for the economy as well as the finalisation of the policy would help unlock significant investment into this sector.
Ever since the defence ministry on March 2016 during the Defence Expo in Goa released the half completed DPP, with the chapter on Strategic Partners missing, the industry has been waiting for the details, which, in all likelihood, is expected to get finalised and announced soon.
Defence sector manufacturing and sourcing continues to be dominated by the public sector units and Ordinance Factory Board except for few general equipment and systems while there just a handful of private players.
When the half-cooked DPP16 came out, Indian private sector had welcomed the proposal to identify select Indian private sector defence manufacturers as strategic partners for making submarines, combat aircraft, warships and helicopters, and armoured vehicles.
The new acquisition category of 'indigenous designed, developed and manufactured' is being seen as a sort of game changer for the private sector defence manufacturing fostering innovation and R&D.
That said, some manufacturers are apprehensive about achieving indigenous content of 60% as several components, including specialised alloys need to be imported.
To prevent creation of monopolies, a company or a business house declared a strategic partner for any one platform, say helicopters, won't be selected as partner for any other platform.
"Clear and simple guidelines are required regarding their (Strategic partners) selection as well as the percentage of proposed cost of project that will be outsourced to entrepreneurs and MSMEs," says a report of PwC-Assocham study on this issue.
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