IDDM will be a game changer in defence production: Report

QUEPEM (GOA): Indian and foreign players have welcomed the creation of a new category under the Defence Procurement Procedure saying that it will be a game changer for the future, leading to real participation of domestic companies.

The Indigenously Designed Developed and Manufactured ( IDDM) category is expected to bring significant investments in R&D and will ensure that the scientific talent in India is engaged in developing cutting-edge technologies in defence, a PwC-ASSOCHAM report said today.

According to the report titled 'Make in India: Achieving self-reliance in defence production', foreign OEMs (Original Equipment Manufacturers) have also welcomed the change but with some suggestions.

They feel this category will have implementation issues as OEMs have moved away from manufacturing systems and components in their factories.

OEMs rely on a global supply chain and have limited influence in mandating suppliers to localise in a given country unless economics and technical capability justify the investment.

"While the industry is upbeat about the IDDM category, some OEMs are apprehensive about achieving the indigenous content of 60 per cent," Dhiraj Mathur, Partner, Leader Aerospace and Defence, PwC India, said.

Defence Minister Manohar Parrikar has however said there should be indigenous content of 40 per cent.

According to the report released at the Defexpo here, the industry also welcomes the proposal to identify select Indian private sector defence manufacturers as strategic partners.

These companies would play central roles in developing complex and strategic systems within the country, or receive technology transferred from foreign suppliers in large defence contracts, it said.

While the government has taken several policy initiatives to lower entry barriers and improve ease of doing business, there is a need to also focus on improving infrastructure to create aerospace and defence hubs, it added.

As per the report, creating clusters is particularly relevant for MSMEs (Micro Small and Medium Enterprises), who supply components and sub-assemblies to the defence PSUs, ordnance factories, DRDO (Defence Research and Development Organisation) and private players.

The palpable change in the government's mindset regarding private players as equal partners rather than competitors to defence PSUs was also highlighted in the report.

It also laid down measures such as aligning tax policies to create synergies. Treatment of private sector as equal partners have the potential to further boost industry sentiment, it noted.