Focus On Domestic Manufacturing

In a rare media interaction with SP’s Land Forces, Ashok Kumar Gupta, Secretary, Defence Production, outlined his vision for defence manufacturing in India and addressed a wide range of subjects including ‘Make in India’, DPP 2016, defence offsets, role of DPSUs, investment in R&D, delays in procurement decisions, blacklisting and other related issues

SP’s Land Forces (SP’s): in your opinion, what are the new key points of DPP 2016 for a foreign OEM looking at Indian market?

Secretary: India is in the midst of modernising its armed forces and it is estimated that $250 billion will be spent on capital procurement in the next 10 years. In the new Defence Procurement Procedure 2016, ‘Buy (Indian-IDDM)’, ‘Buy (Indian)’, ‘Buy & Make (Indian)’ are the most preferred categories which means that increasingly request for proposals (RFP) will be issued to the domestic industry. The only way for the foreign OEMs to leverage domestic demand is to tie up with domestic companies either for collaborative R&D followed by production or through transfer of technology for production through joint ventures or they can set up their own manufacturing base.

In addition, a number of potential ‘Make’ projects have been identified by the department; which are likely to follow ‘Make’ procedure for development-cum-procurement. The foreign OEMs can collaborate with the Indian vendor, the prime contractor, for development for defence equipment.

Provisions have also been introduced to allow foreign OEMs to select Indian production agency of its choice for transfer of technology for maintenance infrastructure.

Moreover, offset implementation process has been made flexible by allowing change of Indian offset partners (IOPs) and offset components, even in signed contracts. Foreign OEMs are now not required to indicate the details of IOPs and products at the time of signing of contracts.

Services as an avenue of offsets have been reinstated with certain conditionalities.

SP’s: How exactly are the ‘Make in India’ initiatives for aerospace and defence sector being promoted? what has been the reaction of foreign OEMs to it till date?