Defence And Aerospace Sector

In the last two years, since the launch of the ‘Make in India’ initiative of the Government of India (GoI), the Defence Sector in India has seen immense activity, evincing interest from Indian private industry as well foreign OEMs. While the Indian industry has steadily moved towards capacity building, foreign OEMs have shown never seen before enthusiasm to participate in ‘Make in India’ in Defence. Under the leadership of Hon’ble Raksha Mantri, Shri Manohar Parrikar, long pending and critical changes have been made to bring in ease of doing business in Defence procurements. Whether it is relaxation of norms for FDI in Defence or the new Defence Procurement Procedure (DPP 2016), Government of India has paved the way for robust defence manufacturing in the country.

As part of the DPP 2016 a new and the most preferred category ‘Buy (Indian – IDDM)’ – Indigenous Design, Development and Manufacturing – was launched with greater focus on placing Indian industry in the driver’s seat to lead design and manufacture products for defence, thus leading to reduction in imports, and to progress towards self-reliance in defence manufacturing. Additionally, greater interactions with Indian industry by Armed Forces and MoD are encouraged in promoting Make categories (Make I & II) where funding is available for development of equipment / system / platform or their upgrade, with an emphasis on Small and Medium Enterprises (SMEs) by reserving projects with development cost upto Rs.10 crore and Rs.3 crore respectively.

Another highlight of the DPP 2016 is to make provision for creating long term engagement with Indian Private Industry through the Strategic Partnership model. Though promulgation of these provisions as a separate Chapter of DPP is still under process and may see light in 2017 – Indian private companies will benefit immensely through such partnerships. Private industry will be able to receive niche technology in certain segments of defence from selected foreign OEMs to enhance competence and capability in design and manufacturing, and will be assured of a long-term business pipeline at par with the DPSUs and Ordnance Factories.

India’s membership to the MTCR club, and her designation as a ‘Major Defence Partner’ by the United States is a unique status which puts India at par with other closest allies and partners of the United States. These developments should help the Indian Defence industry to gain access to many military technologies which have thus far remained beyond its reach.

The induction of the indigenously designed Light Combat Aircraft (LCA) Tejas by Hindustan Aeronautics Ltd in Indian Air Force was the highlight of 2016.

The Major G2G deals concluded with France for 36 Rafale fighter jets with 50% offset liability, with US for 145 M777 ultra- light howitzers with US$ 200 Mn offset, and with Russia for 5 S-400 Triumph Long Range Air Defence Missile Systems.

 

Source: DEFENCE & AEROSPACE | 2016 – A RETROSPECT (A Publication by CII)

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