Modi to curb defence imports
India to make 70% of its hardware in 5 years
BANGALORE: India’s Prime Minister Narendra Modi vowed yesterday to end India’s status as the world’s number one defence importer, saying he wanted 70% of hardware to be manufactured domestically by the turn of the decade.
Speaking at the start of a major aviation industry conference, Mr Modi told hundreds of foreign and local businessmen that his government would favour domestic firms when awarding defence contracts as part of a larger push to boost India’s manufacturing sector.
“We have the reputation as the largest importer of defence equipment in the world,” the prime minister said at the biennial Aero India show in the southern city of Bangalore.
“That may be music to the ears of some of you here. But this is one area where we would not like to be number one,” he added.
“We are reforming our defence procurement policies and there will be a clear preference for the equipment manufactured in India.”
India, which has long been the world’s largest buyer of defence equipment, is in the midst of a multi-billion-dollar upgrade of its ageing military hardware and recently lifted a cap on foreign investment in defence.
While his right-wing government has pledged to push forward with planned military purchases, which stalled under the previous centre-left Congress administration, Mr Modi is determined that does not come at the expense of the domestic defence industry.
The prime minister said he wanted domestically made equipment to account for 70% of the procurement budget within five years, up from the current 40%, in what he said would be a major boon to the economy.
“A nation with a strong defence industry will not only be more secure. It will also reap rich economic benefits,” said Mr Modi.
Mr Modi also said he wanted global firms to invest in India, for example by transferring some technology to local firms, as part of negotiating their lucrative deals to sell hardware.
He said India’s offset policy, which requires foreign contractors to invest a percentage of the value of their deal in India, needed further reform.
“I want our offsets policy not as a means to export low-end products, but to acquire state-of-the art technology and skills in core areas of priority,” Modi said.
The five-day show, which is held at an air base on the northern outskirts of the city, attracts the bosses of hundreds of aviation and defence firms.
The United States has the largest contingent this year, with 64 companies including Boeing, followed by France, Britain, Russia and Israel.
France’s Rafale will be among fighter jets, transport and other planes showcased at the air show as the country attempts to seal a long-delayed $12 billion (390 billion baht) deal to supply 126 of the jets to India.
France’s defence minister, Jean-Yves Le Drian, is due in India next week to discuss the deal.
India chose French company Dassault Aviation in January 2012 for exclusive negotiations for the jets but successive deadlines to complete one of the world’s biggest defence contracts have slipped by.
Indian newspapers reported this month that the deal had become stuck in a disagreement about prices.
Israel’s defence minister Moshe Yaalon is attending the air show as the country also attempts to grab a larger stake of India’s military modernisation plans.
Reacting to Mr Modi’s speech, the Israeli embassy said the country was open to technology transfer and joint production of hardware with India.
“It’s a great opportunity to expand the already-close cooperative relationship that we have with India,” embassy spokesman Ohad Horsandi said.