India Likely To Appoint Independent Defense Regulator For Deals Involving Private Players

The Indian government is likely to institutionalize an independent regulator outside the purview of Ministry of Defense (MoD) to deal with private sector players in major defense manufacturing programs.

The Cabinet Committee on Securities (CCS) is expected to finalize the inclusion of Strategic Partners (SPs) model that the government plans to enter into with private firms in critical and high-end defense projects like submarines, helicopters, fighter planes requiring long term commitments, Business Insider reported Wednesday.

Defence Minister Manohar Parrikar met senior industry representatives from industrial chambers CII, FICCI, Assocham, PHD Chambers of Commerce on April 25 and held discussions over the "strategic partnership" issue, which he assured will be evolved "through consultative process and over the next one month."

"We are expecting to finalise the model by May end and there could be few more meetings, as needed," a senior defence ministry official was quoted as saying by the news magazine.

"The final paper, after making constructive improvements will be taken up for finance approval and then put up to the CCS," he added.

The move to appoint an independent regulator is also in line with the recommendations of the government appointed panel, he said.

"A regulator will be put in place as existing policies procedures and mind sets are rigid and do not allow flexibility needed for technology intensive programs needing pragmatic view in contracting and monitoring," sources who attended the meeting said.

Sources added that Parrikar assured the industry players that strategic partner model will be utilised only for very complex and technology intensive programs (more like single party buying process but after following due selection process).

The minister further asserted that wherever multiple sources are feasible and where certainty is higher, programs will go by the "Buy and Make (Indian)" route and the Strategic Partners model will be for just 3-4 select segments.

On queries by the industry, Parrikar said P75 (I) submarines, helicopters and fighter aircrafts could be the segments that will be looked into for selection of SPs. Light Combat Aircraft MK2 itself could be pursued under the SP route. "With multiple helicopter and fighter programs there could be one or two strategic partners in either," sources said.

The meeting comes after reservations were expressed in certain quarters over the concept which calls for identifying one or two partners in key defence manufacturing fields.