Indigenization gets a boost in defence policy

Indigenization gets a boost in defence policy

New Delhi: The defence ministry on Thursday unveiled its first production policy, with an accent on indigenization of defence production and a focus on small and medium enterprises (SMEs) in the sector.

The stated objective of the policy, which is more in the nature of overarching principles rather than specifically actionable guidelines, is to achieve “substantive self-reliance" in the design, development and production of defence equipment.

Under the new policy, India will acquire weapons systems from abroad only when “the Indian industry is not in a position to make and deliver the equipment as per the staff qualitative requirements in the requisite time frame."

This will apply primarily to equipment required after 10 years. Time-sensitive purchases will continue to be made from abroad if necessary.

Subsystems that cannot be economically manufactured in the country will also continue to be imported. On top of this, the government will buy from abroad any equipment whose indigenous development and production is delayed.

According to the new policy, the government will explore “all viable approaches as formation of consortia, joint ventures and public private partnerships within the government-approved framework."

The policy makes it mandatory for the armed forces to “exercise due diligence at all times to keep in view feasibility and practicability" while raising requirements.

It adds that the government will set up a fund for research and development “to provide necessary resources to public private sector, including SMEs, as well as academic and scientific institutions." The policy document does not give specifics on the size of the corpus or how the fund will be used.

The new policy mandates the department of defence production, along with the defence research and development organization and integrated defence staff, to jointly take a call on the identification, evaluation and absorption of technology, wherever transfer of technology from a foreign to an Indian company is involved.

Analysts are not impressed.

“We need to wait and see how effectively the government works with the private sector to develop indigenous platforms and systems, given the limitations of time and technology that may be available in the country," said Nidhi Goyal, director, Deloitte.

“At present, these are just broad principles, which by themselves are no good," said retired colonel Rajiv Chib, now a defence analyst with PricewaterhouseCoopers India. “The government needs to come up with specific guidelines if it is to succeed in its objective."

The production policy comes close on the heels of an overhaul of India’s defence procurement procedure, released on 6 January, also with an accent on developing domestic capability.