The prevalent extraordinary situation caused by spread of Coronavirus, has created worldwide healthcare and economic crisis with wide-ranging ramifications and is set to tip the global economy into a recession. The crisis-management needs robust and comprehensive national strategy, to tackle this unprecedented crisis. Any package to address it therefore demands a set of mitigative and subsequent stimulus measures that would need to be of an exceptional scale and require implementation on a war footing. It is also applicable to defence manufacturing.
Indigenous defence production is the essential components of long term strategic planning of any country at the time of looming economic crisis. Our heavy dependence on imports is not only alarming from the perspective of strategic policy, but is also a matter of concern from the economic point of view in terms of the potential for growth and employment generation. To promote indigenous design, development and manufacturing of defence equipment within the country, the Government opened the defence sector for private sector participation in 2001 and committed to a level-playing field. However the Government-dominated sector in Research and production has been enjoying virtual monopoly in defence with a captive customer base, and no Government monitoring on performance improvement, these have become a predominant assembler of systems and failed to keep pace with technological developments.
Indigenization, at present, is being limited to absorption of ToT under licensing arrangements or assembling and also indigenizing a few components, spares and assemblies which when measured in any performance parameter such as innovation, customer satisfaction, timely delivery, productivity and export earnings, portray a rather dismal picture. It is time and opportunity to revamp the working culture of the research and production agencies and make them more accountable and efficient along with involving the private sector by giving them chance for fair competition rather than producing voluminous Procurement procedures.
The Draft Defence Procurement Procedure (DPP) 2020 (over 700 pages) released by MoD suffers from interpretational uncertainty in number of issues namely such as what constitutes ‘modern’ technology or what are the other grounds on which the government would be prepared to permit FDI beyond 49 per cent. Same is the case with Offset on FMS/IGA cases and Defence Industrial Licenses etc. The views of stake holders have been solicited and hopefully number of issues will be clarified.