Strategic partnership model for military manufacturing meets resistance within Defence Ministry

NEW DELHI: The report by a key panel to select private sector players that will be accorded special ‘ strategic partner’ status for major military manufacturing projects has met resistance within the defence ministry, with various departments and services raising concerns that process recommended may lead to monopolisation and needs more consultation.

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Sources have told ET that a high-level meeting on the Atre Committee report - which has identified five priority areas for Make in India in the defence sector – recently took place in South Block, headed by Defence Secretary G Mohan Kumar where the proposed model faced resistance.


While the larger concept of the strategic partnership ( SP) model to identify and encourage private sector players for manufacturing in defence was agreed to, the details of the report - including the suggestion that only one company be selected for a particular segment like warship production or submarine construction – has not found full favour within the ministry.

Officials told ET the defence ministry’s finance department raised concerns the model could lead to monopolisation. It may be noted that one of the suggestions of the Atre panel was to exclude defence manufacturing from the Competition Act, 2002. The Navy is believed to have batted for the selection of more than one private company per segment. The Air Force is said to have suggested more consultation on the model, with an industry view point being brought in.

Several more rounds of meetings are expected given the objections raised and it is now unlikely that it would be announced with the upcoming changes in the defence procurement procedure (DPP).

The ministry is expected to announce the DPP 2016 close to the upcoming DefExpo in Goa but sources told ET the SP model would not be elaborated at this stage as it would need cabinet approval as well as constitutional amendments.