Indian Military

New Delhi — With a view to achieve substantive self reliance in design, development and production of defence equipment, weapon systems and platforms, the Defence Minister Shri AK Antony unveiled the first ever Defence Production Policy (DPrP) here today. The policy also aims at creating conditions conducive for the private industries to play an active role to achieve the objective. The DPrP will act as a catalyst to enhance potential of Small and Medium Enterprises (SMEs) for indigenisation as also for broadening the defence research and development base of the country.

Releasing the document, Antony said the Policy aims to achieve maximum synergy among the Armed Forces, DPSUs, OFBs and Indian Industry and Research and Development institutions. The Defence Production Policy has been prepared after extensive consultations with various stakeholders such as the three Services, Coast Guard, Integrated Defence Staff, DRDO and Indian Industry Associations – CII, FICCI, and ASSOCHAM etc.

New Delhi — In a first of its kind move, the state-owned Defence Research and Development Organisation (DRDO) has decided to include the private sector for the ‘Rustom’ Unmanned Aerial Vehicle (UAV) project.

The Rustom UAV project is spearheaded by the Aeronautical Development Establishment (ADE), part of the DRDO and the private aeronautical firm Taneja Aerospace & Aviation has been selected for the development of advanced critical system technologies pertaining to the ‘Rustom’ UAV.

The Small and Medium Enterprises (SMEs) have been significantly contributing to the ‘Rustom’ UAV and private firm Taneja Aersoapce & Aviation has already contributed to the prototype of the ‘Rustom’ UAV which is slated to fly in October. The areas wherein the private sector firm will contribute includes airframes and avionics. The ADE has just done the design and integration in the ‘Rustom’ UAV and other technologies and equipment have been outsourced through private firms.

The ‘Rustom’ UAV prototype can fly at an altitude of 25,000 feet for 12-15 hours at a speed of 180 kilometres per hour.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has published a paper in response to the solicitation of views by the Department of Industrial Policy and Promotion (DIPP), arguing for conditional increase, if at all, in the limits to investment by foreign players in Indian defense industry beyond the current limit of 26 per cent, to 49 per cent. The DIPP, in its discussion paper, was considering hiking FDI limit up to 74 per cent, and even 100 per cent in some cases.

The Indian Ministry of Commerce allowed the participation of the private sector in the defense industry in May 2001, permitting 100 per cent equity with a maximum of 26 per cent of FDI, subject to licensing. Under the Defense Procurement Procedure (DPP) 2008, limit was raised to 49 per cent FDI on a case-by-case basis. But the Foreign Investment Promotion Board (FIPB) has not, so far, approved the formation of a venture with a 49 per cent FDI component.

FICCI sees little reason to permit FDI above 26 per cent, considering the existing FDI into the Indian defense sector, saying in a statement, “The 26% FDI cap in the defense sector has already attracted top overseas defense OEMs like BAe, EADS, Sikorsky, Lockheed Martin, Electtronica Defence Systems, etc to hugely invest in India’s defense sector.

New Delhi — Indian small and medium enterprises (SMEs) are set to gain substantially from the growing aerospace business in the country that will arise from the offsets policy. According to an estimate by the reputed PricewaterhouseCoopers, India will spend $25 billion on commercial aircraft and $100 billion on defence until 2014. India is importing passenger and military aircraft in large numbers and the SMEs are eyeing the business that the offsets policy will bring for them.

A host of units that are opening up in the southern Indian state of Karnataka where an aerospace-specific special economic zone (SEZ) is being developed will provide business for the SMEs. About 55 per cent of the land will be allotted to companies for setting up factories and aviation maintenance, repair and overhaul (MRO) activities will be undertaken as well. So far, the state-owned defence suppliers Bharat Earth Movers Limited (BEML) and Hindustan Aeronautics Limited (HAL), Mahindra and Mahindra, Dynamatic Technologies and Japan’s Amada have been allotted land.