‘India’s defence purchase policy attracts global attention’

February 9th, 2009 - 8:06 pm ICT by IANS  

New Delhi, Feb 9 (IANS) Reflecting industry aspirations, India Defence Procurement Procedure-2008 broadly incorporates measures to improve domestic industrial supply, besides encouraging foreign direct investment (FDI) and intensifying R&D in defence industry, a top official said Monday.

The policy has been revised four times since its inception in 2002 and India Inc. should remain hopeful that shortfalls in the policy would be accordingly reformed, said Shashikant Sharma, Director General (Acquisition) in the defence ministry.

He was speaking at the second India Regional Offsets Conference organised here by the Confederation of Indian Industry (CII) in association with the Defence Manufacturing Association (DMA) of Britain and the US Global Offsets and Countertrade Association (GOCA).

Sharma specifically mentioned operational and policy challenges in defence offsets.

Pointing out the need for universality of offset credit transaction, policy issues with technology transfers, desire for development, growth of indigenous defence manufacturing capabilities and the likes, Sharma’s address “reaffirmed that the government is considering a more dynamic defence procurement policy structure”, a CII statement said.

Sharma also pointed out that an offsets partner is now not required to hold a defence ministry licence to associate with India’s military hardware manufacturing sector.

This had increased the scope manifold from 37 to 2,000 industries that can now consider associating with the offset programmes, the official said. The defence ministry was also studying the offset policies of global economies to gather provisions for inclusion in India, he added.

The conference has attracted over 300 participants, including 130 international offset professionals, officers from the Indian government, the defence ministry, the armed forces and India Inc.

“The conference saw a clear understating of India targeting the global defence market,” the CII statement said.

The defence ministry envisages spending over $30 billion for acquisition of military hardware and software over the next five years, 30-50 percent of which will have to be reinvested in India through the offsets route.

This “will intensify new acquisitions, adoption of futuristic projects, upgrading of equipment, support services, and joint ventures, amongst others”, the statement. The overseas companies will be required to fulfil mandatory offsets obligation to the tune of 30-50 percent of such procurements.

According to Maj. Gen. (retd) Mrinal Suman, project director for CII’s defence technical assessment & advisory services, “India is observing exciting times in defence market with a huge shopping list.”

“An ideal proportion of military equipment balance observed in the developed world is 30-40-30 which is spread over state-of-the-art technology, mature technology and obsolete technology.”

“Whilst India’s military equipment balance proportion is 15-35-50, attempting to match up its defence infrastructure to world, India will be spending $100 billion by 2020,” Suman pointed out.

Rear Admiral Rees Ward of Britain’s DMA said: “Like most policies, DPP-2008 is an initial phase of the policy which will evolve with time. We have to overcome disagreements as challenges occur when we get into details.”

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