The Defence Acquisition Council (DAC) on Saturday cleared the broad contours of the ‘strategic partnership’ (SP) model for defence. The DAC is the top decision-making body on defence procurement, chaired by defence minister Arun Jaitley.
However, the finer details are yet to be worked out before the SP model goes to the Cabinet Committee on Security (CCS) for final approval. The policy is likely to be examined by the finance ministry before being considered by the CCS. Last week, Jaitley had a meeting on the SP model with representatives of defence arms of leading groups including Larsen and Toubro, Ashok Leyland, Mahindra and Mahindra, Reliance Infra, Tata Group, Punj Lloyd, Adani Group and Bharat Forge Ltd.
The policy is aimed at engaging the Indian private sector in the manufacturing of high-tech defence equipment in India. As per an official statement released by the MoD, the policy is expected to be implemented in a few selected segments to begin with—fighter aircraft, helicopters, submarines and armoured vehicles. The policy is aimed at developing the defence industrial ecosystem in the country through the involvement of both the Indian corporate and the MSME sector, the statement added. The SP policy was to be part of the amended Defence Procurement Procedure-2016 (DPP), but has not been finalised till now. As per an estimate, defence projects worth more than $35 billion hinge on the SP model.
“The policy will give a boost to the ‘Make in India’ policy in the defence sector and set Indian industry on the path to acquiring cutting-edge capabilities which will contribute to building of self-reliance in the vital sector,” the ministry said.
Referring to sectors identified to implement the policy, it said additional segments may be added in future. The SP model was proposed by the Dhirendra Singh Committee in July, 2015.
Meanwhile, welcoming the policy, industry body CII said it will boost defence sector and will enable greater participation and investment of private players in defence and aerospace sector.
“This is a path-breaking reform in the defence acquisition procedures of the Ministry of Defence and would enable greater participation and investment of private sector in the defence and aerospace sector… The combined strength of both public and private sector companies could be fully utilised towards building a strong domestic defence industrial base,” said Chandrajit Banerjee, Director General, CII.
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