Defence supplies: Soon, pvt firms can partner foreign cos

NEW DELHI: With the much touted policy to open up the defence sector to domestic private players not making much headway even after several years, the government will now actively encourage joint ventures or ���co-production arrangements��� between Indian firms and foreign armament majors.

Under the revised defence procurement procedure, which will be effective from November 1, Indian firms will be allowed to bid for tenders to supply weapon systems and platforms to the armed forces by joining hands with foreign manufacturers to co-produce them domestically.

DPP-2009 will have some new measures to promote private sector participation in the defence sector, largely the preserve of DRDO, defence PSUs and ordnance factories till now, as well as ensure ���integrity and transparency��� in all acquisitions, A K Antony said.

But this will take some doing because India���s entire defence procurement mechanism continues to suffer from debilitating delays and corruption scandals, even as the country is projected to spend a whopping $30-50 billion on arms purchases during the 11th Plan period (2007-2012).

Moreover, India is still forced to import around 70% of its defence requirements because neither have the DRDO and defence PSUs got their act together nor has the private sector stepped into the defence arena in a major way. Antony, on his part, said DPP-2009 will introduce a new category, ���Buy & Make (Indian)���, to promote setting up of JVs in India by big foreign arms manufacturers.

Till now, DPP basically had three categories, ���Buy��� or outright purchase; ���Buy & Make��� or purchase from a foreign vendor, followed by licenced indigenous manufacture with transfer of technology (ToT); and ���Make��� or indigenous development and production.

The new category will allow the issue of tenders or RFPs to Indian firms having ���requisite financial and technical capabilities to absorb technology and undertake indigenous manufacture���. ���This is primarily aimed at encouraging pro-active participation by the Indian industry who could establish JVs with any foreign manufacturer,��� he added.