MoD says will increase indigenous sourcing from 40 per cent today, to 60 per cent in five years
By Ajai Shukla
Business Standard, 24th March 16
Even as the Defence Exhibitions Organisation (DEO) scrambles to patch together a new location in Goa and access roads for Defence Exposition 2016 (Defexpo 2016) --- the first one to be held outside Delhi --- enormous interest in the Indian arms bazaar will bring 1,030 Indian and international defence companies to India’s premier defence exhibition that kicks off on March 28.
Not even a local political movement that is protesting the land use and environmental effects of shifting Defexpo 2016 to Quepem Taluka of South Goa has dampened interest from the United States (93 companies), Russia (71), UK (46), Germany (39), France (38), Israel (38) and other arms producers like South Korea and Italy.
“More than 47 countries will participate in Defexpo 2016. For the first time, we will be holding live demonstrations of equipment, which was a constraint in Delhi”, said AK Gupta, Secretary Defence Production, on Wednesday.
Defexpo’s future location will depend upon how this exhibition goes off. Asked in writing by Business Standard whether subsequent Defexpos would also be held in Goa, the defence ministry responded: “No final decision has been taken on permanent venue of Defexpo. Future course of action will be based on the experience of the Expo in 2016 and the view of the Government of Goa.”
Gupta indicated the success of Defexpo 2016 would not be gauged by the contracts signed, but by how effectively it would provide a business-to-business forum for Indian and foreign companies to tie up partnerships to benefit from the “Make in India” policy.
On Monday, Defence Minister Manohar Parrikar had cleared the new Defence Procurement Policy of 2016. Not coincidentally, DPP-2016 will be available on the defence ministry website on March 28, the day Defexpo 2016 will be inaugurated.
Underlining the new commitment to “Make in India”, Gupta stated that 90 per cent of the procurement approvals by the National Democratic Alliance government had been accorded under the “Buy Indian” and “Buy & Make (Indian)” procurement categories. He said DPP-2016’s new category of “Indian Designed, Developed and Manufactured” equipment would further add to indigenous production.
Interestingly, Gupta provided the first official assessment of the real foreign content of India’s total defence procurement, which he put at 60 per cent. “We do 60-65 per cent of our procurement from domestic companies. If you take out the foreign content that these companies put in and work out the indigenous content, it comes to about 40 per cent,” Gupta estimated.
He also laid down a target of 60 per cent indigenisation in the next five years, a target that most defence industry analysts consider unrealistic.
Amongst the 1,030 companies participating will be controversial Italian company, Finmeccanica, which is the holding company for AgustaWestland, the helicopter maker whose contract for AW-101 helicopters was cancelled by the defence ministry after Italian prosecutors began investigating charges of bribery of Indian officials to get the AW-101 contract.
In the last Defexpo 2014, Finmeccanica had been asked to stay away, with then defence minister AK Antony wary of the cloud over it. Now, with a more liberal “blacklisting policy” being evolved, Finmeccanica is back in the limelight.
However, Gupta confirmed that two other blacklisted companies --- Rheinmetall Air Defence and Singapore Technology Kinetic --- would not be participating.
He also confirmed that Pakistan would not be amongst the 47 countries participating, as it had not been sent an invitation. China had been invited to send an official delegation, but has not responded.