NEW DELHI (Sputnik) — The policy envisages the establishment of long-term strategic partnerships with qualified Indian industry majors through a transparent and competitive process wherein the Indian industry partners would tie up with global overseas equipment manufacturers (OEMs) to seek technology transfers and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains.
"The Cabinet took note of this proposal which deals with encouraging Make in India in relation to defense manufacturing," Indian Defense Minister Arun Jaitley said.
The Defense Ministry finalized the strategic partnership model at a meeting of the Defense Acquisition Council (DAC) on May 20. The policy is aimed at developing the defense industrial eco-system in the country through the involvement of major Indian corporates as well as small enterprises.
"Defense preparedness itself necessitates domestic procurement and domestic manufacturing. A reasonable expectation of government doing business with a particular party incentivizes setting up of manufacturing capacity," Jaitley responded in a query related to estimated booking order under this policy.
Jaitley, however, did not reveal the timeframe for implementing the policy but the shortage of fighter jets and submarines required may force the government to implement it as soon as possible. It is also not clear how the OEMs will be selected.
"It is not clear whether it is these strategic partners who will tie up with the chosen OEMs and participate as prime vendors in the defense ministry tender or whether the defense ministry would enter into a contract with the foreign OEM and nominate a pre-chosen strategic partner as the Indian production partner. In either case, much would depend on the process of selection. The process of selecting the platform would have to follow the same procedure as laid down in the defense procurement procedure, which among other things, entails lengthy field trials. It is doubtful if the adoption of strategic partnership model per se will lead to a hastening of this process," Amit Cowshish, former finance advisor to India's defense ministry, said.