India to pick industry champions as defense buying plan cleared
India approved yesterday a long-awaited policy to boost local defense manufacturing by effectively picking industry champions that would tie up with foreign players to make submarines, fighter jets, helicopters and armored vehicles.
Prime Minister Narendra Modi has vowed to end India’s role as the world’s largest arms importer by asking foreign firms to share technology with local players and then manufacture in India - in return for a slice of the $250 billion analysts estimate New Delhi will spend on its military over the next decade. Under the “Strategic Partnership” model, the government will shortlist and then pick Indian companies to join forces with foreign firms. The winners will be guaranteed billions of dollars of orders to incentivize them to manufacture.
“For each platform, one private sector strategic partner will be chosen,” Defence Minister Arun Jaitley told reporters after a cabinet meeting. “You don’t set up a manufacturing facility if you don’t have any hope of getting orders.”
Government and industry representatives have been haggling over the details of the model for more than a year, delaying discussions for tens of billions of dollars’ worth of deals.
Indian defense manufacturing is small and dominated by state-run outfits, many of which have been criticized for poor performance. Private firms such as Larsen & Toubro, Mahindra Group, Tata Group and recent entrants Reliance Group and Adani Group are desperate to muscle in on their business. Foreign manufacturers such as Lockheed Martin, Boeing, BAE Systems, Airbus and Saab also see India as one of the biggest sources of future growth. — Reuters