Notwithstanding positive developments over the last decade, certain grey areas in industrial licensing and FDI policy need further improvement to facilitate the private sector’s more meaningful participation in the Indian defence industry.
International economic circumstances are propitious for India and Indian defence companies to strike deals that would help reduce dependence on foreign sources for defence needs.
F-35 is not an ideal choice because of the delay in its developmental schedule, a tight production line, prohibitive cost, India’s own efforts to jointly develop and produce a fifth generation fighter with Russia, and little technological or industrial benefits that would accrue.
The Dialogue was featured in prime time on the Chinese State-run TV channel, with the comment of the Chinese Premier Wen Jiabao that it had achieved “positive results”.
An efficient, transparent PPP policy dovetailed with an effective FDI framework will not only ensure that state-of-the-art defence equipment is procured but will also be instrumental in enabling transfer of technology.
Given the sensitivity attached to defence-related FDI, each investment should be subject to wider review and impact analysis following which the FDI percentage could be determined varying between zero and 100 per cent.
The defence budget for 2011-12 has not been unduly impacted by the fiscal consolidation process, and reflects the MoD’s ability to spend resources within the stipulated time.
In the absence of reforms in several areas, DPP-2011 may not be able to achieve its stated objectives of expeditious procurement and greater involvement of domestic industry in defence production.
India’s increasing reliance on FMS route is indicative of its desperation to bridge the gaps in its defence preparedness and shows the weakness of the Defence Procurement Procedure.
Private Sector Participation in Defence Production: Industrial Licensing and FDI Issues
Notwithstanding positive developments over the last decade, certain grey areas in industrial licensing and FDI policy need further improvement to facilitate the private sector’s more meaningful participation in the Indian defence industry.