New Delhi: India moved to reduce its dependence on foreign arms makers with new rules to draw private domestic companies into building weapons for the world's third-largest active-service military.
"We will protect and strengthen the public-sector undertakings," Defence Minister A.K. Antony said at a press conference in New Delhi. Those companies, however, can't meet India's needs and as a result the private sector will be offered "more and more a level playing field," he said.
An eight-page policy document restated previous government assertions that defence contracts will be given to Indian companies whenever possible.
It said weapons development projects expected to exceed 10 years "will by and large be developed within India." The government will establish a fund "to support research and development," including by small and medium-sized companies, the policy said without giving details.
While India has built world-class industrial and software companies such as the Tata Group and Infosys Technologies Ltd, the defence sector is dominated by eight state-owned companies and nearly 40 ordnance factories that provide mostly low-technology equipment, said Mrinal Suman, an adviser on arms procurement at the Confederation of Indian Industry.
India, which wields the world's 10th-largest military budget at $32 billion (Dh117.5 billion) this year, has failed in a decade-long campaign to reduce its dependence on foreign suppliers, which Antony and other officials say have provided about 70 per cent of Indian arms, measured by cost.
India's dependence on foreign arms suppliers limits its drive for a larger role in global politics, Antony said. India is likely to spend nearly $220 billion by 2017 as part of an "ambitious military modernisation plan," said a report issued last year.
Among contracts up for grabs, Chicago-based Boeing, Lockheed Martin, Dassault Aviation, Moscow-based United Aircraft, and the European Aeronautic, Defence & Space Company are bidding to supply as many 126 fighter jets. The policy announced yesterday follows a Ministry of Defence decision last week to ease a requirement for foreign arms providers to invest part of their profits from India in local defence companies. The ministry now will let the foreign companies aim those investments, called offsets, in aviation or security-related companies.
"That revision is not going to create new foreign investment opportunities because the manufacturers of internal security products — bulletproof vehicles, counter-insurgency equipment — are defence-related companies that already were eligible for offsets," said Suman, a retired army major-general.
