What the Strategy for Defence Export tries to achieve is to create institutional mechanisms and establish clear-cut procedures within the overall ambit of the Foreign Trade Export for facilitating arms exports through export promotion/facilitation and export regulation.
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 now seems to be greater recognition of India’s concerns on transfer of technology and not just about co-production but also co-development of next generation weapons. The larger objective for India, however, must be to reduce its dependence on import of foreign equipment and modernize its armed forces in the quickest possible timeframe.
The Guidelines of 2012 have been under review for some time. While a drastic shift in the policy is unlikely, some changes in the policy, clarity about some of the existing provisions and simplification of the procedure seem necessary to make the policy work better.
There are speculations whether the present budget is sufficient to meet expenditure on big ticket items but one has to bear in mind that it is only the advance payment – generally 15% of the contract value – that becomes payable on signing of a new contract. Even if new contracts are signed for say INR 50,000 crore, MoD will require just about INR 7,500 crore for those schemes.
The Defence Minister made two significant points: one, the need for making a significant amount of the nation’s resources available for defence and two, he talked about the slow pace of acquisition of defence equipment as the key concern. These are unexceptional statements of intent and the challenge would be to meet these objectives.
The proposal to relax the present cap on FDI in defence has expectedly drawn sharp reactions. Those who oppose argue that higher FDI is not required and, more importantly, it will not be in national interest, not the least because it will stymie the process of indigenization. This calls for a dispassionate analysis.
It may perhaps be useful to examine some features of India’s Defence Procurement Procedure (DPP) for streamlining of the capital acquisition process for defence procurement. After all, the DPP may well be the only procurement regulation in the world that discriminates against its own domestic bidders
A country’s response to external threats and internal security challenges is based on its defence preparedness, advance planning for contingencies and the political will. The new government will have to make key decisions on different aspects of defence reforms. This Policy Brief puts forward some suggestions.
Of Agents and Agency Commission in Defence
Of Agents and Agency Commission in Defence