More reports on: Government policies

Defence `Make in India' will benefit SMEs as well: Parrikar

25 April 2016

The new defence procurement policy (DPP) tries to shift the focus of `Make-in-India' to small and medium scale industries and the government is stressing on time-bound procedures to achieve that, defence minister Manohar Parrikar said.

The defence minister is reported to be meeting representatives of industry associations to take their views on the controversial ''strategic partnership'' agreement that the government plans to enter into with private firms in critical defence projects like building submarines and fighter planes.

The defence minister's meeting with industry associations comes amidst scepticism among industry and policy makers on the spillover effects of the "strategic partnership" agreement on the economy.

Defence sources said five members each from CII, FICCI, Assocham and PHD Chambers of Commerce and Industry, besides a defence grouping DIIA, will be meeting Parrikar for discussion followed by a dinner amidst strong reservations expressed by industry chambers on the subject.

While the private sector itself feels that only the big firms will benefit from the government's move, even large firms are not open to the idea as they say the policy would restrict them to specific fields and that their overall investment and plans will get affected.

The defence sector has a separate set of procurement procedures, which do not normally exist for other procurements. This is because that products need to be tested as unless successful testing is conducted, the costly equipment can't be procured. So testing is a major criteria and this was, so far, not allowed to Indian private companies and was resulting into major delays.

Reports quoted Parrikar as saying in an interview that the new DPP opens up testing facilities while the various defence PSUs are also offering facilities to the private sector. These, he said, will address the concerns of the industry on an even spread of the benefits of the policy, bringing benefits to the smaller and medium industries as well.

He said the new DPP tries to shift the focus on Make-in-India to small and medium scale industries and there is a time-bound procedure.

The Make in India initiative is gaining steam. The new category of 'Indigenously Designed, Developed and Manufactured' (IDDM) equipment will reverse the current local mix requirement of 30 per cent to an actual rate of 70 per cent over time.

''It won't happen overnight. In the new DPP for IDDM, it will be only now that things will be processed. Orders may be placed after one year and actual production will start after a year. So, it is in 2017 that we will start seeing the real impact. Of course, some push that we had given earlier would result in some shifting of the balance during the current year,'' Parrikar was quoted as saying.

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