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Government mulls boost to local defence firms

Government mulls boost to local defence firms
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First Published: Tue, Feb 16 2010. 11 59 PM IST

Safety measures: The 2010 Defexpo at Pragat Maidan. India wants to raise the share of locally made parts in military equipment from overseas. Ramesh Pathania / Mint
Safety measures: The 2010 Defexpo at Pragat Maidan. India wants to raise the share of locally made parts in military equipment from overseas. Ramesh Pathania / Mint
Updated: Tue, Feb 16 2010. 11 59 PM IST
New Delhi: India wants to increase the proportion of locally made parts in military equipment supplied by overseas contractors, seeking to reduce dependence on foreign manufacturers and boost its own aerospace and defence industries.
The government is mulling over raising the defence offset, or percentage of locally made components in foreign supplies, from its current level of 30%, for deals that involve a transfer of technology, a defence ministry official said.
Safety measures: The 2010 Defexpo at Pragat Maidan. India wants to raise the share of locally made parts in military equipment from overseas. Ramesh Pathania / Mint
At present, foreign contractors have to buy components and systems from Indian vendors that are worth at least 30% of the value of orders higher than Rs300 crore.
“There is a view that 30% offset is too low. As part of the national offset policy, the government is contemplating to increase the offset from present levels to more if it involves technology transfer,” said Satyajeet Rajan, joint secretary at the defence ministry as well as the chairperson of the Defence Offset Facilitation Agency. “It is being contemplated; nothing has been finalized.”
The offset policy is likely to be amended by November.
India also plans to unveil a new defence production policy in a couple of months that will guarantee a minimum order to foreign companies that help the country develop hi-tech defence platforms indigenously.
The government had specifically raised the offset limit to 50% on the acquisition of 126 medium multi-role combat aircraft, India’s largest aircraft deal. “There have been changes made in the offset policy in tune with the requirements,” said Rajan.
India, the third largest importer of fighter planes and tanks, buys nearly 70% of its weaponry from outside.
The import of military hardware and software could touch $30 billion (Rs1.4 trillion today) by 2012 as Indian armed forces buy multi-role fighter jets, artillery guns, a variety of helicopters and long-range maritime spy aircraft, said a recent study by industry lobby Associated Chambers of Commerce and Industry of India.
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First Published: Tue, Feb 16 2010. 11 59 PM IST