India Shifts Defense Procurement Focus From Foreign to Local

In his first Defense Acquisition Council (DAC) meeting earlier this week, Defense Minister Arun Jaitley cleared proposals for the replacement of Indian Air Force’s Avro transport aircraft fleet, supply of Advanced Light Helicopter Dhruv for the Coast Guard and Navy at US $1.2 billion and the US $1.5 billion proposal for fleet support ships for the Navy, Indian media reported.

The DAC is the supreme defense procurement body in India and only those proposals which meet the DAC’s approval are processed for procurement. The focus on procurement from domestic sources has been a theme of the government which Prime Minister Narendra Modi echoed last month while launching the aircraft carrier INS Vikramaditya.

The DAC for the first time mandated that the Request for Proposals (RFPs) for the Avro replacement program would be issued to Indian private players, who can jointly build the aircraft along with foreign vendors.

Acceptance of necessity for the program to replace the fleet of 56 Avro platforms was accorded by the Defense Acquisition Council in July 2012. As per the program, 16 aircraft would be manufactured by the foreign vendors while 40 would be built within the country.

The tender for fleet support ships too would be issued to private sector and public sector shipyards within the country. Another proposal, to produce Offshore Patrol Vessels and Fast Patrol Vessels for the Coast Guard, pegged at US $392 million was also given a green signal.

Missing from the DAC’s decision was the foreign industry expectation of the clearance of projects involving international vendors. Some of these projects include the procurement of Boeing Apache and Chinook helicopters, additional Russian helicopters and an end of negotiations over the medium multi role fighter aircraft with Dassault of France.

Indian industry body has welcomed the government’s decision According to Didar Singh, Secretary General, FICCI “This opportunity to Indian private sector would create a second line of aircraft production and will strength the indigenous capability of Indian industry in aircraft manufacturing. This will encourage the growth of an Indian aerospace industry in the private sector.”

Singh added “The doing away with nomination process will lead to competition and benefit the user and make both private & public sector more efficient leading to innovation and product specialization.”

Proposals cleared would involve Indian public and private sector firms and is aimed at increased indigenization of military hardware, PTI reported.

An Indian firm will have to find an international partner to supply the first 16 of these planes, while the other 40 will be built in India. It may take eight years more for the first of the new 100 per cent made-in-India defense aircraft to fly in our skies, but this breakthrough will lead to enormous capacity-building in the private sector.

Indian companies which have tied up with global defense companies include Larsen & Toubro, Tata group, Pipavav Defense and Offshore Engineering and Reliance Industries.