India spends a significant amount of resources on its national defence. Efficiency in utilisation of resources is not only an economic imperative but vital for defence preparedness. In view of this, the Defence Economics and Industry Centre was created in 2006 to promote research on various economic aspects of India’s defence. Since its inception, the Centre has undertaken a number of policy relevant studies besides constantly engaging vital stakeholders (Ministry of Defence, Armed Forces and Industry) on a range of issues. The major focus areas of the Centre are:
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This Brief analyses industry demands and reviews existing regulations in IT and defence procurement markets, culminating with suggestions on a possible way forward for reforms that can avoid adverse implications of industry demands, particularly in view of their potential conflict with important policies fostering indigenisation.
There is no single agency in MoD to deal with these issues holistically. Generally, matters related to administrative powers are processed separately for each service by the administrative wings concerned with little concern for commonality.
Widespread problems have made the operating environment ‘dysfunctional and inefficient’. Some of this is on account of inscrutable issues like ‘integration of the services with the MoD’ or ‘civil-military relations’ but, in large part, the immediate problem lies with MoD’s inability to resolve more mundane issues.
his Issue Brief examines certain provisions relating to intellectual property rights and transfer of technology in India’s defence procurement procedures, together with suggestions on streamlining the same for achieving enhanced procurement efficiencies in capital acquisitions.
Widespread problems have made the operating environment ‘dysfunctional and inefficient’. Some of this is on account of inscrutable issues like ‘integration of the services with the MoD’ or ‘civil-military relations’ but, in large part, the immediate problem lies with MoD’s inability to resolve more mundane issues.
The national aim should be to make India a design, development, manufacture and export hub. India must study the Chinese concepts of “leap frogging” of technology across several generations and “civilianisation” to exploit dual use technology.
While the government is widely seen as investor-friendly, investment decisions, however, are made on more tangible considerations – ease of doing business, security of investment and intellectual property rights, and returns on investment.
The Indian defence industry needs procedural clarity and simplification to be ingrained in the “Make” procedures, as the rules are presently silent on a number of important operational aspects.
Under the earlier policy, the foreign portfolio investment in Indian defence industry was either banned, or capped at an arbitrary level for certain companies, causing a lot of dissatisfaction among several listed Indian companies which had pleaded their genuine helplessness in controlling such investments given their nature of flow.
There has been much speculation since 2011 about who is going to manage the proposed fund, how is it to be different from the already existing technology related heads in the defence budget, and how will the amount set aside for the purpose be utilized.
