New MoD Policy to Boost Indian Arms Industry

By admin • June 15th, 2010

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India Defence Online, New Delhi – In order to strengthen the public and private firms in the defence sector, the Indian Defence Ministry has chalked out a crucial policy that will lead to self-sustenance and decreased foreign dependency.

According to the Secretary for Defence Production Mr. R.K Singh, the new policy mandates that weaponry and military systems will be identified several years into the future to give leeway to domestic firms for their development and manufacturing. Henceforth, the domestic firms will be allocated the identified systems as development projections with the Indian Defence Ministry stipulating the timeline of the project and providing 80 per cent of the cost that will be incurred.

According to the Indian Defence Ministry, the new policy will come up before the Defence Procurement Board (DPB) for consideration and later, the Defence Acquisition Council is expected to clear it paving the way for implementation in a few months.

Besides discussions with the Indian Defence Forces, other major institutions like Confederation of Indian Industries (CII) and Associated Chambers of Commerce and Industry (ASSOCHAM) have also been consulted for the policy.

Adding insight into this new policy, Secretary for Defence Production Mr. Singh explained that domestic firms will be encouraged to register their technological capabilities in a Ministry of Defence databank. Therefore, once a need is speculated by the Indian Defence Force, the Defence Ministry will then conduct a survey and choose two companies from the databank and award them with the development contracts. These two prime contractors will then be working with a customised consortium of companies. They will then develop a separate prototype of the required system and the Defence Ministry will then either select one or both for mass production.

Currently, the Defence Procurement Policy already lays down a “Make” procedure, which allows the ministry to allocate and fund projects through the Indian industry. However, this has not yet led to any domestic orders for defence equipment partly because equipment requirements have never been identified in advance. However, the Defence Ministry aims to make the “Make” procedure lucrative and promising by adding more equipment in that procedure. Currently, the “Make” procedure allows 70 per cent foreign component but this is expected to be cut down to 50 per cent along with the provision that the Intellectual Property Rights of the foreign component must reside in India.

It has been largely felt by the Defence Ministry that local production of defence equipment has not come up due to lack of incentives in research and development as well as ignorance towards the potential of public and private sector defence firms. The growing dependency on global market and constant technology transfer has curtailed the growth of indigenous technology.

source: india defence online

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