In a bid to cut down reliance on defense imports, India plans to review its defense procurement procedure and give priority to local companies in all military equipment purchase contracts.
“The Ministry of Defense is likely to soon approve a proposal to put ‘buy and make Indian’ as the top category for procurement, as the taint of corruption in the AgustaWestland helicopter deal has stressed the need to shed over-dependence on foreign vendors for military hardware,” a senior ministry official says.
Foreign companies and suppliers will be given the last option, while Indian firms, including those in the private sector, will be given first priority, says Defense Minister A.K. Antony.
Currently, 70% of India’s defense acquisitions are made from foreign companies. India first beat China for the top ranking in Stockholm-based defense think-tank Sipri’s list of world’s largest arms importers in 2011, and has remained first since then.
For private companies that have a foreign firm as joint venture partner, the new rule may insist on a minimum of 50% indigenous product, Anthony says.
“I think our armed forces, government, the Defense Research and Development Organization [and] industry both public as well as private should come together in mission mode so that India can achieve maximum indigenization in a reasonable time,” Anthony says.
The current Indian administration is placing emphasis on private participation in the defense sector and big industrial houses such as the Tata Group, Reliance Industries, Mahindra and Larsen & Toubro are entering the defense manufacturing sector.
“Whatever support is needed from the government, I assure you we will give. I am going to ask about our defense procurement and defense production policy so that we can speed up the indigenization process,” Antony says.
India has spent 782 billion rupees ($14.5 billion) on arms imports since April 2009 from countries including the U.S., Russia, Israel, Germany and the United Kingdom, Antony says.