NEW DELHI – National Institution for Transforming India (Niti Aayog), an India policy think tank, called upon the country's domestic private defense industry to intervene with the Ministry of Defense (MoD) and other ministries to fast track domestic projects and convert some global buy projects to Make in India projects.
The domestic projects are being made under the category, Buy Indian and "Buy and Make India" in which tenders are given only to domestic companies. However, the ruling government has only approved the potential for such projects; no contracts have been awarded so far.
Some of the defense domestic projects which were sought to be fast tracked include Make Indian projects like light vehicles and ammunition carrying vehicles.
In addition, the request to Niti Aayog was also made to recommend conversion of some global defense projects into Make in India projects so as to allow the Foreign OEMs to manufacture in the country as part of their offset obligations. These include 155/52 self propelled artillery tracked guns, 155/52 towed artillery guns, air defense fire control radar system, very short range air defense system and Spike anti-tank guided missile system.
"We have a robust [defense] procurement system in place and Niti Aayog is only a think tank and cannot be a major policy influencer in the defense space," a senior MoD official said. "MoD is particularly unhappy with private sector, that some Indian private defense companies want defense orders without R&D investments."
Everything cannot be made by private companies, because the sector is dependent on foreign transfer of technology, which still faces export restrictions, the official noted.
"We are seeking suggestions from private sector companies to streamline the present process of defense procurement to ensure time bound decisions by the MoD," a Niti Aayog official said.
Analysts are not sure India could depend heavily on the domestic industry to meet its weaponry and equipment needs.
"Indian private sector would naturally want more and more projects to come their way but, at least in the short to medium term, it will not be possible to do away with procurement from foreign original equipment manufacturers," says Amit Cowshish, MoD's former additional financial adviser. "Even in the long run, it is unrealistic to think that Indian industry will be able to meet all requirements of the armed forces without any collaboration with the foreign manufacturers."
"Dependence on domestic projects can go gradually," remarked a MoD official.
When asked how the domestic industry can meet the needs of the defense forces as they have little experience in producing hi-tech weaponry, another MoD official said that the domestic industry can meet requirements if the current degree of indigenization stay at around 30 percent.
Indian defense market is estimated to reach $250 billion in the next 10 years and domestic producers are gearing to tap the market. The private sector defense companies are wanting a level playing field with the state owned defense companies in terms of tax concessions and other incentives.
India latest defense procurement policy announced early this year favors a push to the domestic defense market on priority basis.
"MoD has been pursuing this objective (indigenization through domestic industry) for a long time, though maybe not with much success. What is needed is a pragmatic approach to achieving this goal which is going to be a long haul," Cowshish added.
Vivek Raghuvanshi is the India correspondent for Defense News.
