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How Strategic Partnerships will change the Indian Defence Industry Ecosystem

Systemic changes to the environment around us has affected our thought processes to have an enhanced look at ourselves. This is what the Modi government has done to us, has made us feel better of ourselves and also empowered us with the ability to achieve what we always wanted to. Among the 23 identified sectors for Make in India, the PM has chosen the Defence sector to be the key one. Much talk of reversing the import ratio of 70:30 for more than a decade without any work done on ground. Manohar Parrikar led Defence ministry embarked upon a series of reforms amongst which the Strategic Partnership figured towards the end. This was essentially to ensure that the ground work is done to enable the industry and the nation to respond to the Strategic Partnerships in the private sector, in the manner envisioned by the Dhirendra Singh Committee(of which the author was a key member).

Vision, was to arm the Forces with the state of art weapons and systems for them to engage with the ever-provoking enemy both from within and without. Key strategic procurements cannot be relegated to a vagaries of a procurement procedure(DPP), that handles routine procurements. Delays in decision making, have crippled the Forces as never before.

For example, the procurement of 126 fighter aircrafts in the much talked about MMRCA, began in 2004 or so and RFP was issued in 2006 and no decision was taken till 2016, despite down selecting the lowest bidder in 2013. This is essentially because we drafted a QR for an aircraft that was never made and the global majors such as Boeing, LM, Eurofighter, SAAB/Gripen, Mig, Dassault/Rafale, were competing for the deal. It would have been wiser for the IAF to have placed a finger on the aircraft they needed and rest left to the MoD to make sure the deal is done in a timeframe that the IAF wants. Ideally, such deals must be negotiated between governments to iron out any misgivings and assure support at the government level.

In the same manner as the MoD is able to place orders/indents onto the OFB and DPSUs on a single tender basis; an enabling condition was necessary to extend this to the private sector; thus came about SPs. There is space for everyone, the OFB, DPSUs and the private sector, demand side being strong a balanced approach is expected.

Indian Defence Industry has grown beyond the realms of the OFB and DPSUs to include the private sector as a force-multiplier. While it may be argued that the infrastructure investment in the private sector is way too low, well the game has just begun. In the past five years there have been many private sector companies that have bagged large orders from the MoD. L&T with the K9 Guns in collaboration with Hanwa Techwin, Tata Power SED for the mountain warfare EW systems, Alpha Design for various programs in communications and EW and as recently with ISRO, just to name a few. There are also many examples of private sector actively supporting the Public sector such as the Global Engineers building the explosive plants for OFB, VEM technologies developing their own ATGM with home grown technologies, and so many more. India’s geo-political and economic ambitions have grown significantly. Establishment of a robust indigenous manufacturing capability supported by a energetic and vibrant ecosystem in the Aerospace and Defence industry is the call of the hour.

 

The un-enviable security environment in the Indian subcontinent region, places huge demands on defence requirements. In the foreseeable future, this will only increase thus making indigenous development of modern defence hardware and technology a top priority for the government.

DPP 2016 was indeed a game changer,  a transformational one ringing about such lasting changes with a focus on indigenous design, development and increased manufacturing. With the government’s agenda to reduce import dependence in defence by 35-40 percent it is actively promoting indigenous defence manufacturing with initiatives like Make in India and policy reforms including allowing 100 percent Foreign Direct Investment (FDI). Several states are also offering incentives and concessions in the form of aerospace clusters or Special Economic Zones (SEZs) for developing an ecosystem where all core and ancillary activities related to defence manufacturing can co-exist, the most recent one being Haryana, with a A&D industry policy.

How does the SP policy contribute

It is estimated that procurement to the tune of about US$10 billion worth of defence products per year is planned in the next 5 to 10 years. It is in the interest of the OEMs and the domestic industry to move on from a buyer-seller relationship to that of a partner in terms of co-development and co-manufacturing, with transfer of technology. Indian companies will largely front end all business with the government and the opportunity for the OEMs is indeed huge in establishing a sound relationship not only for Indian market but also to service the global market.

While the government will short-select both the platform and OEM on the one side and the pool of Indian industry considered eligible to become SPs on the domestic side, the differentiator would be the partnership-relevance between the SP and the OEM. This relevance comes about through indication of range and depth of transfer of technologies, development of ecosystem and establishment of a production base in India.

One of the essential parameters of the SP policy is that of outsourcing. Although, deliberately, the Government of India has not indicated any specific number in terms of percentage of outsourcing that an SP should do; they have outlined the concept. Such as, it has been elaborated that the SP is expected to be a system of systems integrator; this means a lot, clearly indicating that if something can be outsourced, please do not do it. Concentrate on the Integration part, concentrate on the core technology part and leave the rest to the eco-system.

How did Bangalore, Hyderabad, Chennai in a major manner and other towns like Pune, Belgaum, Nasik and others in a smaller scale develop into pockets of excellence in Defence Sector? This was because of the DPSUs/OFB and DRDO labs that were in the vicinity that was an Industry-enabler cum Developer. So, there was an eco-system that developed to support the large government owned factories, despite these PSUs having huge infrastructure and their erstwhile known resistance to outsourcing.

Now the situation is much in favour of the small-scale industry. Here, the government will enable the formation of SPs with guaranteed business, four segments have already been identified, the aircrafts, submarines, helicopters and Armour Fighting Vehicles; all of which together count on more than 100 thousand crores. Although the potential SPs in the submarine segment have some infra to talk about, in each of the other segments they have little to offer, and will have to build from scratch. Herein lies the opportunity for the eco-system to develop. If for example we carryout a systems analysis of an aircraft , we could well end up with some 5000 sub-systems that go into its making, some of the major ones being Flight control systems, Engine control systems, Fuel systems, Hydraulic systems, Electrical Systems, Pneumatic systems, environmental control systems, Emergency systems, Rotary systems, Advanced systems, Avionics systems and more than about 200 technologies that determine its efficacy. The idea of listing some of these above, is that the nominated SP will not be able to master all of these and perforce will have to outsource, retaining the core technologies and system integration.

SPs are expected to have a global outreach addressing the global market and service them in addition to the domestic demand. Demand side dynamics are very strong in each of these segments and hence the opportunity for the industry to show up with centres of excellence in each of these areas. In addition, India offers tremendous opportunities in engineering services, supply chain sourcing and associated maintenance, repair and overhaul-related activities. This is the call of the hour and the nominated SPs are mandated to service all revenue requirements, MRO, spares, performance based logistics(PBL) over the life cycle of the product.

One challenge for the industry will be in Skill. From where do you get the work-force? Companies like P3 Consulting Engineering have been the pioneers in establishing a centre of excellence in skill development for training fresh engineering graduates to provide them with a finishing course in design skills. This initiative needs more hand-holding from the government and must extend to manufacturing and services like MRO, testing etc. As per government estimates, a reduction in 20-25 percent in defence related imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India. The industry therefore, needs to build and train talent to address the growing needs of the market. With SPs in business these figures could well exceed estimates.

Tiered system of Industry – this is in the making with the SPs. While presently in India, we either have the MSMEs or then the big industries, the medium ones are neither here nor there; while they continue to do what the MSMEs do, they have greater aspirations. Aspirations will now be matched with discipline oriented investments at system and sub-system levels. Partnerships both with foreign OEMs and with the public sector are in the offing, for increased efficiencies. It is the turn of the DRDO labs to interface with industry in forging technology oriented relationships. Every design house must have a front-end manufacturing house, this relationship will boost Indigenous design and development. Partnerships amongst the private sector will also be the order of the day. Discipline oriented partnerships to converge on technologies and products will determine success in business.

One key element of the policy lies in “Buy in India”. One of the ingredients that determines FE outgo, is raw material. It is widely believed that aerospace and defence grade raw-material is not available domestically. This, therefore becomes a thrust area for achieving our objectives of “Make in India”. If a raw material is available within the country, it must be procured, imports of such raw material must be forbidden, even if the Indian supplier is higher in price. Similar mandate is required for any sub-system and products/technologies that are home-grown.

Cost to Country

It is often argued by few finance experts that Indian products and systems are costly and drains the national exchequer. MoD Finance is very happy with the award of contract going to the lowest bidder, also called as L-1. This could be true in a pure domestic competition, but has a slightly different connotation when the competition is geography agnostic.

Consider this as an example. From available public information, the cost of a Sukhoi 30 MKI if procured directly from Russia is INR 350 Crs. However, when HAL makes the SU 30 MKI, the cost is 450 Crs, implying a cost escalation of 30%. Is it then wiser to procure the SU 30 MKI from Russia and not get it manufactured in HAL?

The answer lies in an understanding of the concept of, “Cost to Country”. When the SU is made in HAL the first advantage the country gains is the direct savings of precious FE of equivalent of USD $60 million per aircraft. There would however, be an element of FE outgo in terms of certain raw materials and proprietary products that may still have to be sourced from Russia. This FE savings can be better utilised for purposes that could have a social affect. The funding of SU 30 MKI from HAL would be done by the MoD in rupee terms, and this rupee is circulated back into the system in a variety of ways. Tax-payers money is getting back to enrich the tax-payer.

The other advantages are far more over-reaching. More than 42 new high-end technologies were mastered by HAL Nashik. HAL Nasik division, has grown into a manufacturing division and one for overhaul. complete Repair and overhaul (ROH) is done from within the country. Besides manufacturing the SU 30 MKI, it also supplies spares, consumables and aerospace fasteners. It has also taken up work-packages for civil aircrafts and exports spares to various countries as well, such as Egypt, Syria, Vietnam, Malaysia, Algeria, Poland and Russia. The complete Mig 21 and Mig 27 fleet( about 500 aircrafts still in service in many Air forces across the world) is supported globally from Nasik. The division has (from information on their website) manufactured 850 aircrafts and undertaken overhaul of more than 1800 aircrafts. The division presently holds on rolls, 1770 trained technical experts and 650 engineers; while more than 8000 trained over the two decades; this much for skill. They have a huge outsourcing bill, including disciplines like sheet metal components, machined components, non-metallic components, springs, metallic tanks, and a variety of tooling items, besides outsourcing labour. The eco-system developed just for the SU 30 MKI line could be more than 350 small companies that are tirelessly working on high end aerospace components. The outsourcing has a target of 30% and is leaning towards that with a 20% outsourcing that is presently taking place. Nasik has three huge industrial estates, viz, Satpur, Ambad and Sinnar with more than 2600 industries in it. The who’s who in the industry have their manufacturing plant there, just to name a few, Siemens, Kirloskars, Crompton Greeves, Mahindra, VIP industries, Mico and many more. Also, to facilitate exports, Nashik division of HAL created a socio-economic JV between HAL and CCI corporation of India to provide a single window export clearance and facilitation for the agri-produce(grapes, Pomegranate, Bananas and others) the region is famous for.

A cost analysis of all of the above and the over-bearing advantages, would indicate that the cost to the country is far less, when we source from within the country.

When our SPs get on to their job, the contribution they could make to the environment would be far greater with a sound eco-system and a formidable production base established in the country with impinging technologies and manufacturing processes of global standards. SP model initiated by the government is a great transformational initiative and all stake-holders must come forward to whole-heartedly support this.

Parting shot

The SP policy is expected to cause a sea-change in the industry both in terms of outlook and real effects. Proliferation of technologies, development of skilled force, best practices in manufacturing, tired system of industry and development of MSMEs will be the order of industry. Niche companies with intense technological outlook will mushroom across the geography of the country and centres of excellence such as Nasik, Bangalore, Hyderabad and Chennai will spring to support the national effort.

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MSME in Partnerships

Sector Overview

The MSME sector is an important pillar of Indian economy as it contributes greatly to growth of Indian economy with a vast network of around 30 million units, creating employment of about 70 million, manufacturing more than 6000 products, contributing about 45% to manufacturing output and about 40% of exports, directly and indirectly. This sector even assumes greater importance now as the country moves towards a faster and inclusive growth agenda. Moreover, it is the MSME sector which can help realize the target of proposed National Manufacturing Policy of raising the share of manufacturing sector in GDP from 16% at present to 25% by the end of 2022.

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College of Material Management

MAKE IN INDIA IN DEFENCE SECTOR | START UP INDIA | STAND UP INDIA

INDIGENOUS DESIGN DEVELOPMENT AND PRODUCTION

Sep’2016

Background.

Defence Procurement Procedures since inception have been incorporating different categories of procurement to enhance indigenous production. From its just two categories in DPP 2002 to the present six categories, the march has been significant, in the decade and a half. Concept of providing priority to categories in acquisition in Defence procurement was first introduced in the DPP 2013.

Never before in the history,  a priority been assigned for indigenous design and development. Having recognized the importance of indigenous design and development, the Manohar Parrikar led ministry has for the first time provided both importance to indigenous design and development as well as granted the pride of place for design and development as a part of the procurement process. What does this mean and what are the implications for the indigenous industry, let us see.

Was there a requirement at all to provide for such a category with overriding priority in the procurement process? Or has this requirement of recognizing the importance of Indigenous Design and Development, come about a bit late into the procedures?

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Procurement Data

 Sep’16

The first full budget of the Modi government presented to Parliament on February 28, 2015 set aside Rs. 2,46,727 crore (US$ 40.4 billion) for defence, which amounts to a 7.7 per cent increase over the previous year’s allocation. The defence allocation is, however, exclusive of another Rs. 62,852.6 crore provided to the Ministry of Defence (MoD) under the heads of Defence Pensions (Rs. 54,500 crore) and Civil Expenditure of MoD (Rs. 8,852.6 crore), both of which do not form part of India’s official defence budget. The latest defence allocation comes in the wake of the Modi government’s all-out push for the ‘Make in India’ initiative, the ‘heart’ of which, as noted by the Prime Minister himself at the Aero India 2015, is the defence industry. The budget also comes in the wake of the government’s acceptance and implementation of the report of the 14th Finance Commission, which has made a number of recommendations that have a bearing on the central government’s budget, a significant portion of which is spent on defence.

The eight per cent growth in the defence budget has to be seen in the light of this development, although there would be plenty of disappointment for the armed forces which would have expected a double digit growth. This disappointment is mainly due to the ever widening gap between the resource requirement projected by the Ministry of Defence and what it is finally allotted in successive budgets. Suffice to mention that the gap, which was eight per cent (Rs. 12,453 crore) in 2009-10 increased to a mammoth 26 per cent (Rs.79,363 crore) in 2014-15 (Figure I). It can be assumed with a reasonable degree of certainty that the gap, both in percentage and absolute terms, would have further increased in 2015-16.

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Whats new in the DPP – 2016

Mar’16

The much awaited DPP[1] 2016 just released by the MoD in absolute harmony with the Inaugural ceremony of the DEFEXPO 2016[2], has created enough hype to justify its formulation or so we would like to believe. For the first time, since it evolved,  the DPP was preceded by an Experts committee that made recommendations for the new DPP and then a task force that took a deep dive into one of the recommendations of the experts committee. The minister this time has been leading from the front, providing the much needed leadership to the bureaucracy and for the first time the MoD gets to hear a first hand account of an entrepreneur, voice of a small enterprise, all of this and more, finding its way into the defence quagmire. The minister has provided a voice to the small enterprises, the entrepreneurs, start ups and many others who never had one, despite the numerous associations that exist.  In many a first, some of these concerns have been addressed.

Lets begin our analysis with the “Preamble”. This DPP incorporates a Preamble, just like the one enshrined in the Constitution. The idea is noble, it is expected to provide the acquisition executive with the wisdom to choose the “spirit” from the “letter”. The acquisition executive is many a time, “Prisoner to Procedure”; MoD officials dealing with acquisition are often called as “Prisoners to Procedures”, since they are most rigid when it comes to the DPP, for fear of enquiries and an unknown, that may haunt them, down the line. Well, the preamble is expected to address some of these concerns and open the acquisition executive’s mind to a more rational application of the procedures in the interest of the acquisition at hand. Should there be a doubt in application of any of the procedural paragraphs, the acquisition executive is expected to refer to the “Preamble”, for a clarification and then follow the preamble, just like what the judiciary would. The question is, if the said preamble has a chosen text, with the ability to provide overarching clarity to the procedures enshrined therein. A great deal of effort is required in choice of words and the formulation of the “Preamble”. The fine print somehow falls short of expectations.

The Preamble sadly begins on a negative note, “Defence acquisition is not a standard open market commercial form of procurement, and has certain unique features such as supplier constraints,…..”, and so on. Well, we could have begun on a positive note, after all, so much effort has gone into making of this landmark DPP. The Preamble definitely lacks the ability to stand out as a Preamble, with an ability to provide overarching support to the execution executive. MoD may do well to take corrective actions in a more robust formulation of the Preamble.

A path changing inclusion in the DPP is the introduction of a new category called, “Buy IDDM”. For the first time, since its inception in 2002, the DPP places importance on “indigenous design”, development and manufacture. Although these attributes such as design, development and manufacture, were present in a subtle manner in the DPP 2013, and inherent in the “Buy Indian” category, they have now got their pride of place in the DPP. This is actually the essential ingredient to “Make in India”, philosophy and will receive more AON awards, as the year begins from April the 01st 2016. This is extremely good and I believe the minister personally intervened for incorporation of such a category. So what then are the implications? The categorisation believes that if the design is indigenous then a manufacturing indigenous content of 40% would suffice to pass muster and should the design not be indigenous then the manufacturing content required is 60%. Well, this beats basic logic. Lets see how.

If the design is home-grown, then the design would most probably rely on indigenous supply chain and chances of indigenous content are high, whereas, if the design is foreign then chances of having higher indigenous content are low, after all, any foreign design would conform to a foreign supply chain attitude. However, paradoxically, the IDDM category demands just the reverse[3]. Is this demand based on realistic assessment of the domestic industry or was it a fancy tool to impress upon a theory[4] devoid of logic? It would be a challenge for the industry to reconcile to the situation.

Does the Preamble clarify, if the spirit of the DPP is to place an emphasis on indigenous design? For example, if there are two solutions for a program, one based on indigenous design and the other on a foreign design, will the MoD encourage a competition between the two? Will not the foreign companies exploit this and push for their design in the systems of Indian Armed Forces[5]?

There is a third challenge here, ie, there is no difference between IDDM with indigenous design and the next higher category, viz, “Buy Indian”. Both of them demand a 40% indigenous content, never mind the lack of design or incorporation of it. How will the MoD, in the former, ascertain that the design is indigenous, considering that every design may not be patented(are we likely to open a Pandora’s box here by asking for patent filings etc?), well we would be entering into a new variety of quick sand.

While recognising the importance of indigenous design and according it the pride of place right on top of the categorisation priorities, MoD has shied away from a complete and total lifting of the abeyance order placed on design services amongst others. The abeyance order[6] that was issued on a knee jerk reaction based on an alleged wrong doing by an IOP[7](still at large), the entire services industry in India was debarred from offsets discharge as eligible IOPs. Despite many representations, this ban, thanks to the rationale application of logic and reason, was lifted, albeit, partially, by the present governemnt. If the government truly believes in promoting indigenous design, then a case exists for a total lifting of the Abeyance order. The entire DPP must be in conformance with the spirit and the spirit needs to be established in the Preamble.

DPP 2016 must have a flavour for all upgrades and MRO type of activity. It would be a treat to see that all upgrades are necessarily under “Buy Indian” category, at best under “Buy and Make Indian”. The type of investments being made by the Indian industry is pretty encouraging, like Reliance in Mehan, VEM in their new integration facility in Andhra and so many more. Indian industry is now ready to take on all type of upgrades and so the DPP may come out clear on this aspect. However, the formulation in the DPP is not exactly that, it reads, “Para 15 ….Such cases could be categorised under any of the categories as given in the paragraphs 6 – 11 (Chapter I)…”. I would like to see all upgrades being covered under either Buy Indian or at best Buy and Make Indian categories. That could encourage domestic industry to make investments ahead of time. Although, I believe, the spirit of the DPP was to get all upgrades in house.

The DPP was expected to clearly differentiate the planning process from the execution process. While the HQ IDS[8] would coordinate the complete planning process till accord of AON, the Acquisition wing would take on from there and issue the RFP and proceed till signature of the contract. This clarity is essential to avoid duplication of work. Everyone in the system need not do everything, it should be teamwork, like a relay race, the baton[9] must pass from one stage to another. There is a tendency in the MoD for each successive stage to re-invent the wheel, this tendency must be curbed, this DPP has not brought in this clarity.

The RFI process must essentially be a commitment for purchase. Many times the industry is encouraged to make investment basis the RFI and hence the MoD must draw up the RFI for a reason and the reason is procurement by the Forces. Sadly, the formulation is otherwise, reads as follows, “The RFI would be published on MoD and SHQ websites for seeking relevant information, on specific procurement schemes. The issue of RFI is not a commitment for procurement”. How do we expect the industry to have a show of hands when the RFI is not serious enough to lead to a commitment of procurement?

In so far as SQRs are concerned, the balance of decision making must shift to the Armed Forces. Let not the necessity, to make generic SQRs, broad based SQRs and SQRs that can generate a multi vendor situation, not deprive the Armed Forces of a system they require. I like the concept of “Essential Parameters A”, “Essential Parameters B”, and “Enhanced Parameters”. While the concept of broad based QRs seems to apply only to the “Essential Parameters A”, the Forces can use the enhanced parameters to get more out of a system, since no system is designed for exclusive use of the Indian Armed Forces. Also by an intelligent use of “Essential Parameters B”, the Forces can get more even as the production begins. This concept is an intelligent insertion by the MoD, based on the leadership provided by the Minister himself. MoD has expressed a willingness to incorporate technical experts to have a deliberate examination at this stage of the planning process, a very welcome move, exhibiting the open-mindedness of the GoI.

There is an effort to cut down the time in the planning process, by reducing the AON to RFP time to 6 months/1 year for either a Buy Indian/Buy and Make Indian programme. This may be cosmetic, since I believe that the planning process may as well take a little longer, cutting down of time is more necessary in the execution process.

Offsets have been pegged at a threshold value of INR 2000 Crores[10], which comes with a mixed feeling. While the industry would have liked to have the offsets continued at the present threshold of INR 300 crores[11] or even lesser, to enable more offsets business. However, considering that the 300 crore limit was fixed more than a decade ago and that more and more programs are likely to go the domestic route, Indian industry is likely to be engaged more effectively by the MoD in the indigenous categorisation, such a decision may have been taken. Also, the MoD is probably not able to effectively manage the offsets, given the other stakeholders/players introduced in the system, such as the CGDA for an audit. For effective monitoring, may be the number of programs will reduce by increasing the threshold. This seems to be a smart move.

A new insertion in this DPP is the design and development by DRDP/DPSUs/OFB at para 71 of Chapter 1. It would have been a great idea to also include private industry at this stage. The confidence reposed in the private industry by the MoD would have been reflective by such an insertion. This therefore leads to a conflict at para 101, that reads, “ … Cases which are being undertaken by DRDO/DPSUs/OFB/Indian private industry as design and development projects, would not fall in the category of Single Vendor cases…”. Therefore the MoD does visualise cases that are undertaken by private industry also, besides the Make I and Make II category of cases. Therefore para 71 may demand a small inclusion of private industry as well.

A great deal of credit is to be given to the MoD for the far sighted “MAKE” procedure, with incorporation of MAKE category 1 and Make 2. Forward looking, industry friendly, ability to give large advances to the domestic industry for undertaking “Make” programs, will provide an unprecedented boost to the indigenous industry. A definite boost for MSMEs is clearly visible in this category, once again a pioneering move by the Defence Minister to encourage the small industry sector. The minister has attacked the “Defence Industrial Base”, and addressed some of the concerns of the small scale units that are pegged at the base of the development pyramid. If India lives in villages, the Industry lives in MSMEs. 90% funding in Make 1 category by the government and a 20% advance are key highlights. A reimbursement of cost of the remainder 10%, should the MoD not procure after a successful development, is another key highlight, once again unprecedented, what a welcome move!! Provision of test facilities for industry and other key benefits accruing from such a move are very encouraging, this will boost exports of defence items from the country.

The fine print is out. Devil is in the details, let us hope this time when we see the DPP on 28th of March, may be The Angel is in the details.

[1] Defence Procurement Procedures

[2] DEFEXPO 2016 for the first time out of New Delhi, held in Goa from 28th till 31st of March 2016

[3] Buy IDDM demands a lower(40%) IC(indigenous Content) overriding on indigenous design and a (60% IC) on a non-indigenous dsign.

[4] The Theory being, “I will demand a higher IC since the design is not indigenous”, after all I must get some compensation for a non-indigenous design

[5] They only need to comply with a higher IC in manufacturing

[6] MoD OM No 9(42)/2013/Offsets dated 23/05/2013 placed on their website on mod.nic.in/DDP/DOMW

[7] Indian Offset Partner

[8] HQ Integrated Defence Staff, responsible for coordination of procurement

[9] Acquisition baton

[10] USD 300 million approximately

[11] USD 45 million approximately

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FDI UPDATE : DEFENCE SECTOR

FDI In Defence : Boon or Bane | Status Paper

Jul’16

On the 20th of June 2016, the Government of India announced a series of FDI measures, all of them relaxations with a view to attract FDI into the country. Before we discuss this important aspect of national policy, it is pertinent to see how this government has taken a wide angle 360o view on the defence sector.

Holistic view

Government of India has taken a holistic view of the Defence Sector and approached reforms in a methodical and integrated manner. While on the one hand the GoI has addressed regulatory aspects from the DIPP side, on the other the MoD has taken concrete steps to enhance ease of doing Business in Defence Sector.

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