The long-awaited partnership policy to boost the Indian private sector’s role in the production of cutting-edge weapon systems were finalised by the defence ministry on Saturday. It will be in collaboration with global armament majors through a joint venture.
The defence acquisitions council (DAC), chaired by defence minister Arun Jaitley, also gave the green signal to the Army to go ahead with its long-term plan to induct three squadrons (39 choppers) of attack helicopters for its three “strike” corps, among other modernization proposals, said sources.
But the main takeaway was the SP policy under the “Make in India” thrust of the Modi government, which initially opens up four major segments of fighter jets, helicopters, submarines, tanks and infantry combat vehicles for private sectors.
SP policy would be cleared by the DAC this month, as a major step towards building a robust domestic defence industrial base, the absence of which means that India still imports 65% of its military requirements and can be strategically choked by foreign powers in times of conflicts.
The SP policy, which will now go to the Cabinet Committee on Security for final approval after the “smaller details” are worked out, is a clear message to the DRDO and its 50 labs, five defence PSUs, four shipyards, and the 41 factories under the Ordnance Factory Board (OFB) that they have largely failed to deliver the goods over the decades.
However, due to the stiff resistance put up by the public sector lobby against the SP policy, defence PSUs, shipyards and OFB will also be eligible to compete with private sector companies for selection as SPs in the submarine and armoured vehicle segments.
The defence ministry will select the companies on the basis of adequate financial strength (Rs 4,000 crore in annual turnover over the last three fiscals, capital assets of Rs 2,000 crore etc), demonstrable manufacturing and technical expertise, existing infrastructure and the ability to absorb technology from their foreign partners.
A company’s record of “wilful default, debt restructuring and non-performing assets” will also be taken into account by the defence ministry.
The foreign companies or original equipment manufacturers (OEMs) will be selected, in a separate but parallel process.
The Indian industry partners would tie up with global OEMs to seek technology transfers and manufacturing.