Nod for private companies to make defence goods

Discussion in 'Defence & Strategic Issues' started by cobra commando, Jun 27, 2014.

  1. cobra commando

    cobra commando Tharki regiment Veteran Member Senior Member

    Oct 3, 2009
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    NEW DELHI: The government's decision on deregulation will give private companies the right to manufacture a number of defence goods. Till 1991 when economic reforms were initiated, the government licensed a bulk of industrial products, including automobiles and white goods. Over the years, the list has been pruned, and now only a handful of industries such as defence, cigarettes, explosives, distillation and brewing of alcoholic drinks and hazardous chemicals require licences. In all other sectors, companies can freely enter and manufacture whatever they want without any restriction on quantity. So far, all defence items required licences, which were tough to come by. The ministry has for long been accused of sitting on applications for years. "Often it took up to five years to get a licence. But those days are over as 55% of the items have been removed from the list," a senior official said. Now, companies won't need a licence to manufacture components, castings and sub-assembly, the official added. In his speech to both Houses of Parliament earlier this month, President Pranab Mukherjee had spoken about encouraging private investment in defence, a theme that ran through the BJP's election campaign. "It shows the government is serious about involving the private sector. There will be more competition, but it gives a chance to many companies to participate in the defence spectrum.

    Read more here:
    Nod for private companies to make defence goods - The Times of India
  3. Cutting Edge 2

    Cutting Edge 2 Regular Member

    Apr 17, 2017
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    PMO, Jaitley push clears path for big private role in defence production

    Updated: May 08, 2017, 12.10 PM

    NEW DELHI: The defence ministry seems to have unlocked the strategic partnership (SP) logjam with a firm push from the Prime Minister’s Office and sustained focus by defence minister Arun Jaitley, setting up the private sector to play a major role in the production of weapons systems for the armed forces.

    A tussle within the bureaucracy over what rules the SP model would follow had resulted in a stalemate within the ministry since February 2016, frustrating leading private sector companies that were expecting to get mega production orders for aircraft, submarines and land systems, a traditional stronghold of the public sector.

    Sources have told ET that a series of meetings, particularly one held in the PMO last week, have given the last-mile push to the initiative.

    Top private sector representatives from three industrial bodies have now been invited by the defence ministry for a meeting on Thursday, where the government is expected to unveil progress made.


    It is expected that four projects will be taken up in the first phase of the strategic partnership project — new submarines, a naval utility helicopter, a single-engine fighter aircraft for the air force and armoured vehicles for the army. The armed forces, the navy in particular, are keen to move fast on the concept to meet urgent requirements and address the equipment deficit.

    “There is no doubt that involving the private sector in this way is the best way forward. Most of the issues have been resolved and the initiative needs to be started on a ‘yesterday’ basis — there is no time to be lost,” a senior armed forces officer involved in the discussions on the matter told ET.

    Contentious issues, including objections from a certain section of the bureaucracy on how to ensure competitiveness after choosing a certain private sector player as a strategic partner for a specific role like, say, shipbuilding, has resulted in rules not being framed, despite the policy being announced as an integral part of India’s defence procurement policy since early last year.

    Officials said a middle ground has been found on most issues, the driving force being specific directions from the PMO that the private sector needs to get a significant chunk of military orders, given that the current model being followed, to push most orders to the public sector, has not been yielding the desired results.

    “There are ways to resolve issues. The objection on the longterm covenant for example cannot hold as anyone making a system like submarines or fighter jets will have to be involved for a 20-25-year lifetime of the product,” a senior government official said.

    Though initially a divided house on modalities of the SP model, the private sector too is now on board with the government’s new push. Several industry leaders that ET spoke with said on condition of anonymity that the principle was always accepted but now issues like the selection process and division of work have been resolved.

    A formal selection process is yet to begin but internal deliberations indicate that six major Indian companies interested in the sector will be able to qualify on financial grounds to be chosen for the strategic partnership model. This includes the relevant units of Larsen & Toubro, Tata, Mahindra & Mahindra, Reliance Defence, Bharat Forge and the Adani Group. Projects worth several billion dollars are expected to be unlocked for the private sector, analysts said.

    “Through SP policy, programmes estimated to be in excess of $20 billion will open up and an attempt will be made to bring the private sector on par with DPSUs (defence public sector units) in terms of opportunity,” said Ankur Gupta, vice-president, EY India. “Post policy rollout, the private sector has to make necessary investments to leverage this bold government initiative and deliver on the large-ticket programmes.”

    As per the current plan, only one company will be allowed to undertake one strategic project and would not qualify to compete for others. This has thrown up a unique challenge for companies such as Tata and L&T that have diversified interests in the field.

    Tata, for example, could want to compete for the armoured vehicles project through its Tata Motors subsidiary and for the naval helicopter contract through Tata Advanced Systems (TASL). More clarity is expected on the matter at Tuesday’s meeting.

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  4. WolfPack86

    WolfPack86 Senior Member Senior Member

    Oct 20, 2015
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  5. rrrajesh.yadav

    rrrajesh.yadav Regular Member

    Nov 22, 2016
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    Decks Cleared For Entry Of Private Players In Big-Ticket Defence Manufacturing

    Swarajya Staff - May 08 20, 12:08 pm,
    Decks Cleared For Entry Of Private Players In Big-Ticket Defence Manufacturing
    Photo Credits-Wikimedia
    Journalist Manu Pubby of The Economic Times reports today (8 May) that intervention by Prime Minister's Office (PMO) and Arun Jaitley, who is currently vested with the additional charge of Ministry of Defence (MoD), has resolved the stalemate that was delaying the roll out of strategic partnership (SP) model.

    The ‘strategic partnership’ model was mooted for creating defence manufacturing capacity in the private sector on a long-term basis in strategic segments such as aircraft/helicopters, warships/submarines, armoured vehicles, missiles, command control systems and critical materials. As part of its efforts to usher in large-scale private investments in mega defence manufacturing projects, MoD has been engaging in continued discussion with leading Indian corporates to establish clarity and resolve contentious issues on the strategic partnership models.

    According to Nitin Gokhale, one of country's leading defence analysts, "For months, two opposing schools of thought slugged it out in the MoD. Besides the divided opinion in the MoD, there were major differences of opinion among Indian and foreign defence manufacturers on the contours of the SP model. In the MoD, one lobby led by a senior official was batting to retain the primacy of the Ordnance Factory Board (OFB) and Defence Public Sector Undertakings (DPSUs). The other section wanted to keep the OFB and DPSUs out of this model."

    The Economic Times report cites sources saying that these festering issues were resolved over a series of meetings, especially the one held in the PMO last week, which gave the final push to the initiative. The report also mentions that private sector representatives from three industrial bodies have now been invited by the MoD for a meeting tomorrow (9 May), where the government is likely to unveil the progress made.

    As per the report, the first phase of the strategic partnership project will be used to manufacture new submarines, a naval utility helicopter, a single-engine fighter aircraft for the air force and armoured vehicles for the army.

    Indian armed forces, the navy in particular, has expressed keen interest to get going on Strategic Partnership initiatives as it wants to meet its urgent requirements and address the lack of equipment.

    India allocates about 1.8 per cent of its GDP to defence and meets 70 per cent of defence equipment through imports. It ranks among the top 10 countries in the world in terms of military expenditure making it a lucrative market for defence products..

    Modi government is working to reduce this import dependence by atleast 35 to 40 per cent through a slew of measures, including actively promoting its signature ‘Make in India’ and policy reforms including allowing 100 per cent Foreign Direct Investment (FDI) in the sector.
  6. WolfPack86

    WolfPack86 Senior Member Senior Member

    Oct 20, 2015
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    Narendra Modi’s US visit likely to be a ‘no frills’ one, focus on strengthening Indo-US ties

    Prime Minister Narendra Modi is scheduled to visit US between June 25 and June 27, landing straight Washington DC. There's however no immediate knowledge of his schedule and the event is likely to be a no frills one, restricted to meetings with US President Donald Trump.

    Prime Minister Narendra Modi is set to meet US President Donald Trump for the first time since he took oath of office in January this year. Speculations are rife that this trip will be one little to no fanfare, restricted only to business. According to a report in today’s Economic Times, the two leaders will also meet at the G20 Summit later in July. The officials still want to go ahead with the visit in order to enable the two world leaders to get to know each other, in a way ensuring a bilateral meeting before a multilateral one.

    Prime Minister Modi is scheduled to visit US between June 25 and June 27, landing straight in Washington DC. The ET reported that plans for a sortie to Houston planned by community activists has been cancelled. His schedule at the White House also appears restricted with a details yet to be taken on the timings and the format of the meeting between the two leaders.

    According to reports, Modi is also schedule to have a few business engagements that will include industry round-table with US CEOs along with meetings with individual lawmakers.

    The leaders have previously had telephonic conversation where the US emphasised that it considered India “a true friend and partner in addressing challenges around the world.” Economy and defense partnerships were also discussed along with strengthening of the security of the South and Central Asia regions. Trump and Modi both resolved to fight together in the “global fight against terrorism.” Trump had also noted that he would look forward to meeting Modi later in the year.

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