Promoting Domestic Prosperity: A Comprehensive Analysis of Prioritising Indigenous Industries in Defence Procurements

This article examines the current defence procurement landscape in India, with a focus on promoting indigenous industries through the ‘Make in India’ initiative. The objective of the article is to assess the impact of prioritising domestic industries in defence procurement policies, analysing both the benefits and challenges that arise from such an approach. It delves into recent revisions of the General Financial Rules (GFR), which have been designed to favour local industries, and how these revisions align with international frameworks like the Government Procurement Agreement (GPA) of the World Trade Organization (WTO). While the intention of prioritising domestic industries is clear, there are notable shortcomings in the current approach. These include limited capacity in domestic manufacturing, challenges in meeting the technological and quality benchmarks set by international competitors, and delays in procurement due to inefficiencies in local supply chains. To overcome these hurdles, the article argues for a more nuanced and strategic approach to defence procurement. Recommendations include enhancing collaborations between public and private sectors, incentivising research and development (R&D) within the defence industry, and fostering a competitive environment that encourages innovation. Drawing insights from successful global models, the article advocates for an improved policy framework that elevates domestic players while integrating them into the broader international defence ecosystem.

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