The Indian Industry today is ready to assume greater responsibility in making the country self-sufficient in defence production. The resurgence of Indian manufacturing sector has been impressive. Not only are Indian companies growing within the country, but are also expanding abroad and many Indian firms are becoming transnational companies.
The Indian manufacturing sector is now internationally competitive with highest quality standards, efficiency and manufacturing facilities. India is also fast developing into a manufacturing hub for world corporations eager to leverage this sector’s proven skills in product design, configuration and customization with creativity, assured quality and value addition.
Since 2001, the Defence Industry sector in India is open to 100 % Indian private sector participation with foreign direct investment permissible up to 26 %. The Indian Defence Industry in the private sector is now gradually assuming the role of system integrator and manufacturer of complete defence equipment and systems. This is a major shift in the role of private sector in India from its earlier supporting role to the public sector by supplying raw materials and components, sub-systems etc.
Indigenisation in defence production is now one of the major thrust areas of the Government. Consequently, our efforts are now directed towards reduction of defence imports and promoting indigenization in defence production sector with the active support of the Indian Defence Industry, both in the public as well as in the private sector. Various steps have been taken in this direction. The recent introduction of “buy and Make (Indian)” category in the defence acquisition process has been designed to enhance participation by the Indian industry, meeting our requirements for state of the art defence systems and platforms by getting into tie ups with technology providers through mechanism of technology transfers in joint ventures. This is a major step which has been taken by the Government as a result of the review of Defence Procurement Procedures. In capital acquisition cases categorised as “Buy and Make (Indian)”, the Request for Proposal will be issued to those Indian industries that have requisite financial and technical capabilities to enter into Joint Ventures, as also absorb technology and undertake indigenous manufacture. The procedure to be followed in this regard will be akin to the existing “Make” procedure with a difference that the production and development by the Indian industry will be through Transfer of Technology and not through Research and Development. I would urge the companies present here to use this opportunity to pursue tie ups and joint ventures as “Buy Indian”; “Buy and Make Indian”; and “Make” will be the preferred categories with option of “Buy Global” being resorted to only where equipment with requisite Qualitative Requirements are not possible to be procured through these methods in the required time frame. Seminars on various topical subjects including this subject are being organized by the Indian Industry Associations during this event, I would request the participants to attend these seminars and seek clarifications, if any required, from the officers who would be attending these seminars.
Consequent to the introduction of Defence Offset Policy, defence offset contract valued over Rs. 8000 crores have so far been signed and many more are in the pipeline. As a result of periodic review of Defence Procurement Procedures, changes have also been introduced in the Defence Offset Policy. Banking of offsets credits is now permissible. The realization of offsets benefits will now be speedier as the policy offset banking will allow the Indian industry to start offsets even before finalizing of contract with foreign OEMs. This will also enable foreign vendors to create offset programme in anticipation of future obligations. In exceptional cases, change in offset partner may now be permitted by the Ministry on being convinced that the change is desirable to enable the vendor to fulfill offsets obligations.
India is a growing market and emerging as a strong economy. With the projected growth of the Indian economy, its defence needs are also correspondingly growing. India, therefore, offers excellent opportunities, both for domestic as well as foreign companies, to forge new alliances and partnerships in the form of joint venture, co-production and co-development arrangements in the Defence sector. In the context of the ongoing modernisaiton of the Armed Forces and the acquisition reforms undertaken by the Government, the Indian defence market now offers tremendous opportunities for formation of joint ventures and direct sourcing by the global players. India needs highly sophisticated and technologically advanced products to meet the requirements of the Armed Forces. We are also looking for collaborations in the field of Defence R&D and tie-ups in critical technology areas in order to meet the requirements of the Armed Forces through indigenous sources to the extent possible.
Source : This article is based on the inaugural address delivered by Secretary (Defence Production) Shri Raj Kumar Singh at the 6th Def Expo 2010.