India to increase private participation in the defense sector under the 'Make in India' initiative
The Government of India to increase private participation in the defense sector under the 'Make in India' initiative. This is a good step towards achieving self-reliance in dealing with the security challenges of the country.
Arguments in favor of private participation in defense sector
- A major portion of the defense budget is spent on purchasing foreign-made weapons and equipment, and generally arms suppliers do not transfer their technology. As such,increased private sector participation will lead to enhanced indigenous capacity building and creation of durable assets there by reducing import dependence.
- Being a major component of the manufacturing sector, the defense sector acts as a catalyst that will boost entrepreneurship, investment and employment.
- Dependence on foreign suppliers causes delay in procurement and sometimes inferior quality weapons and equipment are provided by them. In addition,there are problems with the supply of spare parts.
- Strategic autonomy and self-reliance become extremely important in critical situations like war.
Steps taken by the government
- Under Defense Procurement Procedure (DPP) - 2016,categories of acquisitions like 'Buy(Indian-IDDM)' 'Buy (Indian)', Buy and Make (India)'and 'Make' have priority over 'Buy (Global)'given. IDDM stands for Indigenously Developed Design and Manufacturing.The Defense Acquisition Council has approved the broad framework of the strategic partnership model. The objective of this policy is to involve the Indian private sector in manufacturing high-tech defense equipment in India.
- Since the 'Make in India' initiative in 2014, the 'Department of Industrial Policy and Promotion(DIPP)' 4 has issued 81 industrial licenses to 61 companies for manufacturing various defense items.
- Foreign investment up to 49% is permitted through the automatic route and above 49%through the government route, on a case-by-case basis.
