The Defence Ministry has rewritten the rules to let companies in the private sector produce weapons which are bought from foreign manufacturers.
The new rule says that the contract in the 'buy and make' policy will be placed on the foreign companies after which a transfer of technology will take place where the private companies in India will procure the necessary information as well as the equipment required to manufacture the weapons, reports Economic Times.
Previously, any weapons bought from foreign vendors automatically went to the public sector units such as HAL, BEL and BDL.
However, a few conditions apply when the ministry chooses the companies. The main condition is that the company should have at least two years' experience in the sector. Other rules say that the company should be involved in manufacturing and should be owned by Indian citizens.
The turnover of the company should not be less than 10 per cent of the project deal in two years and the company owner and company itself should not be seen as a wilful defaulter, reports Economic Times.
Experts believe that there could be some difficulties in the selection process.
"In the past too, there was no formal bar on the private sector but as there were no guidelines, the public sector was being nominated as the production agency. In theory, this will help the MoD in selecting a private sector entity to be nominated as a production agency," Amit Cowshish, a former financial advisor, told Economics Times.