08-04-2015
The call given by PM Modi has raised new questions about defence production without addressing the old ones.
Speaking at an interactive session organised by the Confederation of Indian Industry (CII) at Bangalore in February this year, defence minister Manohar Parrikar said we need "implementation and action" and not "little-little" changes in policy.
Implementation
While that is true in a general way, one policy that requires not just implementation and action but also more than "little-little" changes is the "make" procedure, a curious mix of policy and procedure. Introduced in 2006, it was intended to provide an opportunity to Indian industry to undertake research, design and development of high-technology complex systems, with government funding up to 80 per cent of the cost of prototype development and assured purchase order for the predefined quantity of the equipment so developed. Sadly, not a single project has taken off under this category so far.
The question then is what does past experience show and what needs to be done now. In 2011, MoD came out with a Defence Production Policy whose objective was to achieve "substantive self-reliance" through indigenisation. The next year, MoD promulgated a new look "offset" policy which requires foreign companies to plough back at least 30 per cent of the contract value into the Indian defence sector, if the contract is for Rs 300 crore or more, through one of several permissible modes, including transfer of technology or equipment to the Indian offset partners.
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