New procurement plan, strategic projects key to PM’s defence push

NEW DELHI: A new procurement procedure in the works and strategic manufacturing projects will be key to implementing Prime Minister Narendra Modi’s plan to position India among the top defence producing nations in the world and give a boost to the economy as it battles with Covid-19. In a review of the defence industry on Thursday evening, the PM emphasised on self-reliance and exports – twin objectives that will require the new procurement procedure that is in the final stages of implementation to give an advantage to domestic firms involved in manufacturing. The policy, sources said, will reflect this focus and direct imports are being placed at the very bottom of the priority of procurement and Indian designed developed and manufactured products will be given the highest importance. While this was reflected in earlier policies as well, projects have barely taken off under the route and the plan now is to focus on how Indian companies with intellectual property rights could be given a pricing advantage as well. Though the industry is wary about an anticipated budget cut in capital procurement, the renewed emphasis on exports by the PM in a meeting with key stakeholders including the defence, finance and home ministers has given fresh hope that additional markets could make up a slow down in domestic demand. India has accelerated its exports over the past four years to become the 23rd largest arms exporter in the world but is way behind eastern neighbour China that is now among the top defence producing nations in the world. The glimmer of hope is that if adequate measures are put in place to attract foreign investments, India could significantly increase exports in collaboration with western defence giants that may want to bring down production costs. Independent analysis done by defence majors show that if the scale is large enough, shifting manufacturing bases to India in the defence and aerospace sector can result in as much as 10% reduction in costs. Sources said that the PM’s direction to economise defence expenditure to focus on capital acquisition could lead to accelerating strategic manufacturing projects that are already under process. The Strategic Partnership model, which is currently focused on producing naval helicopters, submarines and fighter jets in India in collaboration with foreign nations has the potential to boost domestic companies into the global league. At current pace however, none of the three projects are likely to be finalised in less than two years but an urgent push could cut down the timeline significantly.