The Defence Acquisition Council (DAC) on Saturday, May 20, finalised the broad contours of a much-awaited policy to boost the Indian private sector's role in producing high-tech defence equipment in India. The policy aims at building submarines and fighter jets in India in partnership with global armament majors.
According to sources, the DAC, a top decision-making body on defence procurement, chaired by Union Defence Minister Arun Jaitley, also asked the army to go ahead with its long-term plan to induct 39 attack helicopters for its three "strike" corps, among other modernisation proposals.
The DAC held an in-depth deliberation on the new policy for the second time this week and decided to give it a green signal.
The strategic partnership model aims to create a robust defence manufacturing ecosystem in India by involving both the major Indian corporates as well as the Micro, Small and Medium Enterprises (MSME) sector. These sectors will then tie up with Original Equipment Manufacturer (OEM) to seek technology transfers not only to set up a domestic manufacturing infrastructure but also supply chains.
Make in India to get a boost
The major takeaway of this policy is that Prime Minister Narendra Modi's 'Make in India' initiative is going to get a leg-up. "The policy will give a boost to the Make in India policy in the defence sector and set Indian industry on the path to acquiring cutting-edge capabilities which will contribute to building of self-reliance in the vital sector," the ministry said.
It also added that while the policy will be implemented on the identified segments like segments like fighter jets, helicopters, submarines and armoured vehicles (tanks and infantry combat vehicles), additional segments may be added in future.
"Appropriate institutional mechanisms will be set in place to implement the policy," the ministry said.
Last week, Jaitley had held a meeting on the SP model with representatives of defence arms of leading groups like Larsen and Toubro, Ashok Leyland, Mahindra and Mahindra, Reliance Infra, Tata Group, Punj Lloyd, Adani Group and Bharat Forge Ltd.
The defence ministry will be selecting the companies on the basis of their adequate financial strength (Rs 4,000 crore in annual turnover over the last three fiscals, capital assets of Rs 2,000 crore etc), demonstrable manufacturing and technical expertise, existing infrastructure and the ability to absorb technology from their foreign partners.