Covid-19: India Defence Minister leaves indigenisation in private hands

22 May 2020 (Last Updated May 22nd, 2020 16:46)
Covid-19: India Defence Minister leaves indigenisation in private hands

India Defence Minister, Rajnath Singh, highlighted, as with the rest of the senior cabinet, the importance of self-sufficiency, and the need to indigenise further.

Singh also mentioned that the 8,000 odd micro, small and medium enterprises (MSMEs) that supplied 20% of defence production of government organisations had suffered during the lockdown as the only buyer of defence products was the government.

To help these organisations, and in consultation with them, the Ministry of Defence had extended the response dates of RFP/RFI and early clearance of pending payments. The Secretary (Defence Production), also mentioned the diktat to Defence Public Sector Undertakings (DPSUs) that they have been asked to clear payments of MSMEs and announced that production targets have not been scaled down. The hope was that these measures would help realise the target of achieving $25bn in defence production by 2025.

Besides these steps, Singh highlighted the earlier comments by the country’s finance minister that no contract below $26.4m would be a global tender. That is twice the previous limit where preference was given to MSMEs. When the government releases the list of weapons / platforms that are part of an import ban, it should give more clarity as to what companies should be developing or investing in, or even creating strategic partnerships with global companies.

In the meantime, there was an announcement notifying 26 items of 127 (where purchase preference is given to local suppliers) to be procured only from local suppliers, irrespective of purchase value, provided they meet minimum local content as prescribed for each item. This is not the list mentioned by the finance minister regarding an import ban on weapons / platforms, but a list consisting of spares for things such as Helo Landing Grid, Gemini Inflatable boat, Belleville Springs, doors for use on ships, etc.

India seems like it is pushing the indigenisation programme quickly. How much of these measures will eventually help defense specific companies, help them bring in investment from abroad, modernise, become competitive and provide value to the armed forces and government organisations will determine the success of these reforms. But for now, there’s a sense of urgency and optimism in this space.