DAC launches strategic partnership model with Rs21,000-cr Naval copter programme

31 Jul 2018


The government on Monday approved the implementation of guidelines for the Defence Strategic Partnership model that incentivises domestic manufacture of military equipment by private as well as foreign firms.

The Defence acquisition Council also on Monday approved the production of 111 utility twin-engine helicopters worth an estimated Rs21,000 crore for the Indian Navy as the first project under the Strategic Partnership policy.
The decision to implement the policy was taken at a meeting of the DAC — the highest decision-making body on procurement, headed by defence minister Nirmala Sitharaman.
It is proposed that 16 of these helicopters will be procured in fly-away condition from a foreign vendor and the remaining 95 will be built in India by an Indian partner through joint ventures and technology transfers.
These helicopters will replace the Indian Navy’s ageing fleet of single-engine Chetak helicopters operating from warship decks.
"In continuation of its efforts to boost indigenous defence industry and to reduce timelines so as to ensure timely delivery of equipment to the Armed Forces, the DAC discussed and approved implementation guidelines for the Strategic Partnership Model," a defence ministry spokesperson said.
The policy on Strategic Partnerships aims at institutionalising a transparent, objective and functional mechanism to encourage broader participation of the private sector, in addition to defence public sector units (DPSUs) under the Ordnance Factory Board, in the manufacture of defence platforms and equipment such as aircraft, submarines, helicopters and armoured vehicles. 
It will serve to enhance competition, increase efficiencies, facilitate faster and more significant absorption of technology, create a tiered industrial ecosystem, ensure development of      a wider skill base and trigger innovation. 
The four segments identified for acquisition under the strategic partner (SP) route are — fighter aircraft; helicopters; submarines, armoured vehicles / main battle tanks (MBTs).
From a strategic perspective, this will help to reduce current dependence on imports aligning the defence sector with ‘Make in India’ initiative of the government of India and gradually ensure greater self-reliance and dependability of supplies essential to meet national security objectives.
The strategic partner (SP) is expected to play the role of a system integrator by building an extensive eco-system comprising development partners, specialised vendors and suppliers, in particular, those from the micro, small and medium enterprises (MSME) sector.  The policy aims at developing tiered industrial sectors in each segment by entering into teaming agreements and development partnerships with other industries, including micro, small and medium enterprises (MSMEs), DPSUs, ordnance factories, other PSUs, Defence Research & Development Organisation and foreign companies that are part of the global supply chain in the relevant sector, so that an eco-system of domestic manufacturers in the Indian defence sector is developed, including for spares and capacities for repair and maintenance of the platforms.
While giving this information in a written reply the Rajya Sabha, minister of state for defence Subhash Bhamre said capital procurement of defence equipment, however, is undertaken based on operational requirements of the armed forces and the availability or capacity to produce the equipment to keep the armed forces in a state of readiness to meet the entire spectrum of security challenges.
During the last three years and current year (up to June 2018) out of total 168 contracts, 106 contracts have been signed with Indian vendors for procurement of defence equipment for armed forces such as helicopters, radar, ballistic helmets, artillery guns, simulators, missiles, bullet-proof jackets, electronic fuses and ammunition.
At the same time, he said, the government is pursuing initiatives to achieve higher levels of indigenisation and self-reliance in the defence sector by harnessing the capabilities of the public and private sector industries in the countries. These measures include according priority and preference to procurement from Indian vendors and liberalisation of the licensing regime. 
DPP accords the highest priority to 'Buy Indian’ (designed, developed and manufactured). The ‘Make’ procedure has been simplified with provisions for earmarking projects not exceeding development cost of Rs10 crore (government funded) and Rs3 crore (industry funded) for micro, small and medium enterprises (MSMEs); and with provisions for involving private industry as production agencies and technology transfer partners.

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