The draft offset guidelines 2020, with revamped features, is a bold attempt at attracting technology and investment as well as promoting defence exports. However, the MoD may consider further refining some of the features of the revised guidelines.
Inclusion of new clauses in the draft DPP-2020 and changes made in some of the existing ones are intended to make the SCD more comprehensive. However, there is a scope for bringing about textual clarity in the new as well as some of the existing clauses of the SCD, especially those which have been modified.
The inevitable reprioritisation of the central government’s expenditure in the coming union budgets would affect the resource allocations particularly for big ministries like the MoD, which will be forced to realign their business practices.
Given the rapidly rising pension liability in India and the concern expressed by the CDS, the experiences of the US and the UK could be useful in carrying out pension reforms in India.
Draft DPP-2020 marks a paradigm shift from the past in many respects. It contains several new features intended to hasten the procurement process and provide a further fillip to the Make in India initiative in defence.
Reforming defence pension is no more an option but a compulsion considering its exponential growth in the past, which is likely to continue in the future if no reform is undertaken.
Considering that the defence capital expenditure already accounts for a very high share in the central government’s overall capital spend, any substantial hike in the former’s share looks less likely. This is more so given the government’s priority to spend on infrastructure and other non-defence capital assets to revive the economic growth.
Having decided to create the post of CDS, the next logical step for the government is to define its charter of duties and responsibilities. The government needs to examine not just the CDS’s role as a single-point military advisor, but also his role in other matters that are equally important in driving critical defence reforms.
The government’s decision to allow the private sector to undertake the development of complex defence equipment is a step in the right direction. It will help forge a larger innovation system to meet the diverse requirements of national security. However, caution may be required to avoid duplication of efforts and prevent indirect import.
Research Fellow, IDSA, Dr Laxman Behera’s article on the proposed corporatization of the Ordnance Factory Board (OFB), titled ‘Rebuilding ordnance factories’ has been published in Business Standard on August 30, 2019.
In a bold move, the government has floated a proposal to corporatise the Kolkata-headquartered Ordnance Factory Board (OFB), under which there are 41 factories with combined manpower strength of over 82,000, writes Dr Behera.
COVID-19 and India’s Defence Spending
The inevitable reprioritisation of the central government’s expenditure in the coming union budgets would affect the resource allocations particularly for big ministries like the MoD, which will be forced to realign their business practices.