Security of the province is of paramount importance since clip immemorial, and a certain sum of military outgo becomes a cardinal necessity irrespective of a point whether a state is rich or hapless. A state ‘s strength revolved around keeping steady un-hindered economic advancement with the presence of mighty ground forcess possessing proper stock of munition and armor to continue the solidarity and sovereignty of that peculiar state. Consequently, all over the universe the swayers ( including in India ) had ever dealt military and military associated equipments, policies, and forces clandestinely and with great attention.

Examination of the history reveals that, production of munition and armor was ne’er pressed into the custodies of private forces. Even in India, the production/stocking of military equipment ever had the component of secretiveness and had ever remained as a state-led administration. Kautilya ‘s Arthasastra emphasises, “ The Chief of Ordnance shall set up mills staffed with craftsmen for the industry of machines for assailing in conflicts ( Verse 2.18.1 ) . All equipments brought out into the armory shall be stamped with the King ‘s seal and would be decently stocked ( Verse 2.18.4 ) . “ The Moghuls had canon mills under the control of Emperor called as ‘TOP-KHAANAS ‘ with ‘KHANSMAN ‘ or ‘Lord Steward ‘ as an In-charge. Historian Robert Home recorded that, even Tipu Sultan took a acute involvement in the production of pieces wholly under the control of the province, and established at Seringapatam 11 armories for doing and completing little weaponries ; 4 big armories and 3 edifices lodging machines for tiring guns ” .

Post Independence-Neutral Attitude. In melody with the age old construct and belief of ‘Defence Industry to be controlled merely by State ‘ , the Planning Memorandum ( PM ) of 1945 and the Industrial Policy Resolution ( IPR ) of 1948 and 1956 placed the weaponries, aircraft and ship edifice industries in the populace sector under the control of the Cardinal Government. There was a broad spread feeling that it was ‘improper ‘ for the Ministry of Defence ( MoD ) to travel in for coaction with the private sector. Parliament did non allow any move in this way. Second, in the country of defense mechanism production, net income devising by private persons in times of war and peace was considered unwanted. Post independency, Nehru commissioned PMS Blackett, a British physicist to fix a study sketching the steps necessary for India to go near self sufficient in defense mechanism production. Though self trust and ego sufficiency were on the Blackett ‘s study, there was a tepid attitude towards military demands due to the political doctrines of Indian National Congress and Nehru ‘s strong postulated neutrality in the signifier of Non -Align Movement ( NAM ) .

Chinese Aggression. The existent drift for the armed forces was merely received in the wake of the 1962 Chinese aggression. The munition mills, which until so were being gainfully employed to bring forth java percolators and movie projectors, were revitalised. At the same clip, the geopolitical developments all over the universe have critically affected developing states like India. The demand to keep qualitatively better armed forces, and accordingly equipment and substructure, has become the demand of the hr. It was besides apparent that the state will hold to be increasingly being more reliant on its ain capablenesss and construct a believable defense mechanism industrial base to provide the demands of armed forces. Despite the ‘will ‘ to lend, the private sector at that occasion could non lend much due to miss of expertness, substructure and resistance from Govt policies and was confined to play a low-level function.

The Yawning Gap. In the absence of worthwhile participants in the private sector, monolithic investings by the authorities to raise substructure for defense mechanism R & A ; D in the 1960ss and 1970ss was a wise determination. However, due to the altering military environment, the demands of armed forces towards sophisticated munition and equipment were of all time turning and could ne’er be fulfilled by the unequal autochthonal production rendered by the populace sector despite heavy investings. Therefore to make full the yawning spread of jutting demands of armed forces and available limited resources at that place come up an inevitable demand for import of the necessary munition and equipments by disbursement Crores worth of foreign exchange.

Foreign Exchange Spending. India ‘s disbursement on weaponries imports since 1999 Kargil struggle have risen to $ 25 billion and is likely to further lift beyond $ 30 billion by 2012. India ‘s import of defense mechanism articles as on today consists approximately 70 % of the procurance in value footings from foreign beginnings because the Indian public sector can non present in footings of quality or velocity on either research or production of military shops. It would be amazing to observe that, India is presently the universe ‘s biggest importer of weaponries deserving 3 % of GDP or $ 30 billion. This does non bode good for a state that seeks self trust and aspires to be a planetary power.

Change in Policies. Rising to the juncture, the govt has started to court the private sector by denoting assorted policy alterations, liberalizations for the active engagement in the defense mechanism production, and thereby to cut down dependence on the other states. These include 100 % engagement of the private sector in defense mechanism production with FDI to the extent of 26 % capable to licencing from the Dept of Industry Policy and Promotion ( DIPP ) , funding research and development, every bit good as appropriate commissariats in Defence Procurement Procedures ( DPP ) of 2005, 2006 and 2008 along with some amendments to DPP-2008 that came effectual from 01 Nov 2009.


Aim of this paper is to analyze the function of private sector engagement in the defense mechanism production in the visible radiation of turning demands of sophisticated munition and equipment by the armed forces vis-a-vis the incapableness of public sector to run into the challenges.


Indian Ordnance Factories Organisation

Formation. In order to run into the increased, coincident demand of armaments and military equipment in the European and Eastern theaters of war and attendant British inability to transport the needed measures of weaponries and ammo, a figure of defense mechanism oriented industries were set up in India by the British. The rifle mill at Ishapore ( oldest established in 1801 ) , ammunition mill at Kirkee, shells and gun passenger car mill at Jabalpur and saddler mill at Shajahanpur are a few in case. Soon, there are 39 Ordnance Factories geographically distributed all over the state at 24 different locations and are running under the Department of Defence Production under Ministry of Defence.

Role of Ordnance Factories. The administration is chiefly engaged in industry of Arms, Ammunitions, Equipment, Armoured Vehicles & A ; Personnel Carriers, Transport Vehicles, Clothing and General Stores points. After run intoing the primary demand of the Armed Forces, trim capacities are utilized for supply to non-defence sector and exports. The gross production of Ordnance mills during the twelvemonth 2005-06 was Rs 8811.59 Crores. Entire gross revenues including issues to build up forces and other bureaus and civil trade in the same twelvemonth was Rs 6891.68 Crores. This constitutes about 40 per centum of domestic supplies to the armed forces. Whereas, the part of OFB to IN in the twelvemonth 2009-10 was a meager one and half per centum. The jutting mark was 11,000 Crores and delivered was merely 6,000 Crores.

Innate Challenges. The traditional challenges to the direction of Ordnance Factories have been explained in the undermentioned bomber paragraphs. However, the point to observe is that the Ordnance Factories noticeably have non done good except in the instance of the last of these challenges, i.e. they have non been taking any net budgetary support from the authorities since 1999-2000: –

( a ) Significant decrease in the complete caput cost through decrease of inordinate staff while at the same clip retaining quality adult male power.

( B ) Speed up production to run into the outlooks of the premier clients.

( degree Celsius ) Faster soaking up of imported new engineerings either from abroad under license production or from the DRDO.

( vitamin D ) Reduced budgetary support from the Govt.

Utter Fiasco. It is obvious that owing to the uninterrupted monopoly they have enjoyed over a period of old ages as ‘state pampered administrations ‘ they could non prolong in the race with foreign counter parts in bring forthing sophisticated goods warranted by armed forces or at least in showcasing such capablenesss. With the uninterrupted dependence on DRDO, and entire disregard of in-house R & A ; D installations they miserably failed to present the coveted goods in clip. The Munition Factories are plagued with inanition due to miss of competition, multiple internal human resource jobs. A brief note on DRDO is deserving adverting in this back bead to appreciate the close nexus between these two reciprocally failed administrations.

DRDO Organisation

Formation of DRDO Organisation. The Defence Research and Development Organisation ( DRDO ) was formed in 1958 and since so, DRDO has risen from a few research labs to a big administration with 50 one well-established research labs spread throughout the state. The DRDO is engaged in chase of province of the art engineerings so as to accomplish progressive autonomy in defense mechanism arms and equipment ” . Every twelvemonth about 200 plus scientists join the DRDO. The work force of the DRDO is over 25,000 forces with 6750 scientists in its Defence Research Development Service ( DRDS ) cell.

Accomplishments of DRDO

Integrated Guided Missile Development Programme. The most important discovery in the field of high engineering that DRDO can tout off is the Integrated Guided Missile Development Programme ( IGMDP ) . Government of India approved the IGMDP in 1983-84 with the purpose of bring forthing a broad scope of guided missiles. Supersonic anti-ship sail missile BRAHMOS is yet another ( although it is a joint venture with Russia ) success narrative. Besides these, accomplishments in other Fieldss they claim are Main Battle Tank Arjun, Advanced Light Helicopter, Pilot less mark aircraft, radio detection and ranging systems like the INDRA I and II, particular steels, packed nutrients, snow vesture, vehicles, span beds, naval echo sounder ‘s and EW consoles to call a few.

Failure of DRDO

Gp Capt A G Bewoor torments in his article as, “ whenever the armed forces want a arm system, the DRDO constantly says they can do it, and they have an impregnable record of ne’er presenting. Ultimately, we import that same equipment at 10 times the cost. Narratives of such perfidiousnesss are excessively many to recite. Every indigenisation undertaking of DRDO/OFB is much behind the agenda with success narratives limited to few engineering demonstrators. The authoritative illustrations of our R & A ; D failures are the Arjun armored combat vehicle, INSAS rifles, Saras, Kaveri, Akaash, Nag, Indra Radar and so many. ”

Absence of Perspective Plan. The dreamy attitude of Ordnance Factories left unerasable defects on the populace sector technological forepart despite being the largest employer of adult male power, and pushed it towards incompetency and organizational failure. In the absence of any route map of their hereafter position, they even can non supply any confidence that they can run into the projected demands of armed forces and therefore neglect to bring forth any farther religion of the user. Another notable characteristic is while the defense mechanism populace sector under returns outsource to the extent of 30 per centum, this figure is about 80 per centum in the instance of munition mills. Therefore, it was apparent that, the munition mills in bend are dependent on private sector and the function of private sector can non be under estimated though for the clip being they are restricted to a secondary function.


The state ‘s defense mechanism industrial capacity was concentrated in another category of endeavor, the Defence Public Sector Undertakings ( DPSUs ) besides Ordnance Factories. The DPSUs are organised under the Department of Defence production within the Ministry of Defence. With increased production of armaments during the 1960-70s the figure of DPSUs had grown to nine by the 1980s. This was reduced to eight in 1986 by the transportation of Praga Machine Tools limited to the Ministry of Industry. The DPSUs involves themselves in the industry of modern sophisticated arm systems, in advanced electronics, and in the production of alien metal metals for aerospace undertakings. The eight DPSUs are M/s Hindustan Aeronautics Limited, M/s Bharat Electronics Limited, M/s Bharat Earth Movers Limited, M/s Mazagon Dock Limited, M/s Goa Shipyard Limited, M/s Garden Reach Shipbuilders and Engineers Limited, M/s Bharat Dynamics Limited and M/s Mishra Dhatu Nigam Limited.

DPSU Summary. The DPSUs have been developing a broad assortment of weapon systems and equipment under license production. This big industrial attempt should, in theory, provide the agencies to bring forth maintain and fix important parts of the India ‘s military equipment, supplying purchase against dependence on foreign supply and the agencies to guarantee sustained military operations. However, as brought out by Baidya Bikasha Basu, “ there has been a small or no effort in this way. OFs/DPSUs and the private sector should affect themselves in experimentation and developing defense mechanism equipment in entirety of defense mechanism demands. In this venture, where coaction and cooperation lead to invention or failures, the OFs / DPSUs should be prepared to accept both. ”

Emerging challenges offer chances to look at alteration. The defense mechanism industry by virtuousness of its technological border and security applications is a important strategic industry. National authoritiess in the West have long recognised this linkage and go on to germinate policies that both back up the industry and retain its fight. In contrast, the Indian authorities, while handling all defense mechanism PSUs as security related, has done cherished small to fix these critical industries to run into planetary challenges. India hence, often falls quarry to the games that developed states play. Gaining the harm, Govt has woken up and started reforms by proclaiming assorted liberalizations and policies to promote the private sector thereby to restrict the dependence on foreign resources.


Defence Offset Policy

Defence Procurement Procedure 2005. Inclusions of commissariats related to off sets in DPP 2005 was merely a modest beginning. Except for stipulating the contract threshold of Rs 300 Crore and ordering an offset bound of 30 per centum of the contract, there was non excessively much of amplification on the modes and other conditinalities for dispatching the beginning duties. The process was obscure with respects to inclusion of private sector industry for dispatching offset duties. Although symbolically a good beginning was made through the inclusion of an beginning policy in the DPP 2005, it remained as a non-starter chiefly owing to miss of lucidity.

Defence Procurement Procedure 2006. In 2006 the range of the policy was clearly defined and the countries for dispatching the beginning duties were clearly enunciated. The defense mechanism beginnings were compulsory for all capital acquisitions under the class of ‘buy ‘ ( straight-out purchase ) , ‘buy and do ‘ ( purchase from a foreign seller followed by accredited production ) , where of all time the cost of acquisition in the RFP exceeds Rs 300 Crore ( about $ 70 million ) . The minimal demand of beginnings at 30 per centum under the ‘buy ‘ class and a lower limit of 30 per centum of foreign exchange constituent under the ‘buy ‘ and ‘make ‘ class was prescribed. In footings of countries for discharge of beginning duties, the policy was specific viz. : –

( a ) Direct purchase of, or put to deathing export orders for defense mechanism merchandises and constituents manufactured by, or services ordered by the Indian Defence Industries.

( B ) FDI in Indian Defence Industries, and

( degree Celsius ) FDI in Indian Organisations engaged in defense mechanism.

Defence Offset Facilitation Agency ( DOFA ) . The most of import characteristic of the 2006 policy was in footings of creative activity of an organizational construction for execution of Offsets viz, Defence Offset Facilitation Agency ( DOFA ) .

Defence Procurement Procedure 2008. The Defence Offset Policy 2008 came into consequence on Sep 01, 2008. Based on the inputs from all quarters the commissariats related to banking of beginning credits were incorporated, the licensing demand from MoD for the industry of defense mechanism merchandises was done off with. Alternatively, attachment to the process stipulated for the defense mechanism industrial licensing demand as mandated by the Dept of Industry Policy and Promotion ( DIPP ) , process of Min of Industry is now required to complied with. However, the revised process of 2008 remains soundless on the issue of multipliers. Besides this, a new clause has been included ( as an wake of 26/11 incident ) that, the commissariats will non be made applicable to the procurances made under the Fast Track Procedure ( FTP ) in all chances to rid of the holds involved in come ining into executing of beginning contracts.

Draw Backs of Defence Offset Policy

Lack of Universally Accepted Definitions. In its current signifier the offset process is limited to direct beginnings. However, the direct beginning processs are non precisely in sync with the internationally practiced definition of direct beginnings. Therefore, acceptance of universally accepted or acknowledged definitions for lucidity of idea among all the interest holders is the demand of the hr.

Banking Offset Credits. Commissariats on banking of beginning credits facilitate the seller to commence concern operations in the purchaser state without waiting for the award of a procurance contract. However, due to rigidness of the commissariats in the policy, if a seller is able to make more beginnings than his duties under a peculiar contact, the provider ‘s recognition can be banked and would stay valid merely for a period of two old ages after decision of the contract, and due to this the attempts put in by the seller goes in vain and acts a deterrence.

Offset multipliers. There is no reference of Offset Multipliers in 2008. Although DPP 2006 provinces that, the handiness of giving extra weights to countervail holding multiplier effects in footings of exports generated or constructing autochthonal capableness in strategic engineering merchandises, or other issues may be considered after reexamining the experience of implementing the above policy. It would hence be appropriate to harmonize a higher multiplier factor for a underdeveloped state like India, whizzing the nucleus aim of defense mechanism industrial base through defense mechanism beginnings.


The extent of private sector engagement vis-a-vis the defense mechanism spending has been relatively limited this far. On the other manus, the private sector frequently looks at short-run investing and returns, which inhibit strategic investings. The inability to export is another restraint ; since the measures required may frequently be restricted, there have to be concerted attempts to advance exports, within the bounds of national security.The part of the private sector to the Indian defense mechanism industry has ever been important albeit in a piece meal footing. The major defense mechanism related enterprises and accomplishments of the private sector companies are enumerated in the undermentioned bomber -paragraphs: –

( a ) Tata Group. The Tata group is providing full systems for DRDO-developed Pinaka multi-barrel projectile launcher, constructing a launch vehicle for Akash missile system and a major participant in an electronic warfare programme. Tata Motors has developed an autochthonal light specializer vehicle ( LSV ) that is presently being tested by the Indian Army. Tata ‘s outgrowth as a major force bodes good for the Indian defense mechanism industry, which is otherwise characterised by monopolistic endeavors and high import-dependency. Its presence in the industry will besides heighten India ‘s ‘self-reliance ‘ in defense mechanism production.

( B ) Larsen & A ; Toubro ( L & A ; T ) . Licenses have been given to L & A ; T, one of India ‘s largest technology and building companies, to construct war vessels, pigboats, arm platforms ( offshore, drifting and submerged ) , high velocity boats, radio detection and ranging, echo sounder, electronic warfare equipment, armoured and combat vehicles including associated systems and sub-systems such as turrets and bridge-layers. The Boeing Company has signed a memoranda of apprehension ( MoU ) with Larsen & A ; Toubro Limited ( L & A ; T ) for joint geographic expedition of concern chances in the Indian defense mechanism sector.

( degree Celsius ) Mahindra & A ; Mahindra ( M & A ; M ) . Mahindra & A ; Mahindra has set up the Mahindra Defence Systems. The Mahindra “ Striker, ” a light weight combat vehicle, is considered ideal for armed reconnaissance and mounted patrols. Mahindra Defence Systems late unveiled their Light Specialist Vehicle ”Axe ” , the all-terrain vehicle, which can suit six/nine soldiers. They are embarking in to developing assorted under H2O bringing systems.

( vitamin D ) Ashok Leyland. Truck-maker Ashok Leyland started out with supplies of “ Hippo, ” the popular heavy trucks for a general service function manner back in the 1970ss. Since so, the company has produced field heavy weapon tractors, high mobility vehicles, light recovery vehicles and H2O bearers.

( vitamin E ) Kirloskar Oil Engines Ltd. It specialises in ship engines and has been take parting in many programmes with the Indian Navy.

( degree Fahrenheit ) Godrej Aerospace. Godrej Aerospace, a company under Godrej & A ; Boyce provides a critical application for the Agni missiles. It has besides contributed to the production of hardware and sub-systems for India ‘s cryogenic engine programme. The company is besides actively involved in habitableness solutions for naval war vessels.


Towards Self Reliance. As the Defence Secretary stated, “ The Indian Defence Industry in the private sector is now bit by bit presuming the function of system planimeter and maker of complete defense mechanism equipment and systems. Indigenisation in defense mechanism production is now one of the major thrust countries of the Government. Consequently, our attempts are now directed towards decrease of defense mechanism imports and advancing indigenisation in defense mechanism production sector with the active support of the Indian Defence Industry, both in the populace every bit good as in the private sector. The issue of indigenisation is a dual edged arm. On the one manus there can be small argument that this is so the manner in front ; but the factor of cost disadvantages in autochthonal production and the rate of soaking up of modern engineering are so despairing factors. This policy needs to be dovetailed with a larger preparation constituent in the initiation bundle and every bit far as possible a Transportation of Technology ( TOT ) option.

Transportation of Technology ( ToT ) . The ToT as portion of beginnings has been intentionally allow off of the horizon of the beginning policy. As a distinguished Scientist of DRDO puts in “ Critical defense mechanism engineerings are either denied or controlled through assorted control governments. These are ne’er offered and hence can ne’er be obtained through the RFP path even if the state is prepared to pay. Therefore, frequently it is non possible to acquire the engineering through contracts and leveraging our purchase power though beginning policy proves to be merely certain manner for acquisition of denied engineering ” .

Stairss Galore. Assorted stairss have been taken in this way. The recent debut of “ bargain and Make ( Indian ) ” class in the defense mechanism acquisition procedure has been designed to heighten engagement by the Indian industry, meeting demands for province of the art defense mechanism systems and platforms by acquiring into tie ups with engineering suppliers through mechanism of engineering transportations in joint ventures. In capital acquisition instances categorised as “ Buy and Make ( Indian ) ” , the RFP will be issued to those Indian industries that have requisite fiscal and proficient capablenesss to come in into Joint Ventures, as besides absorb engineering and undertake autochthonal industry. The process to be followed in this respect will be kindred to the bing “ Make ” process with a difference that the production and development by the Indian industry will be through Transfer of Technology and non through Research and Development.

Indigenisation Plan. The Navy had prepared a 15-year indigenisation program that was good received by the industry. A Science and Technology roadmap has been drawn up for the Navy that identifies the ‘end-product ‘ capablenesss that needs to be built over the following 20 old ages. This roadmap gives a clear image of engineerings and merchandises that are foreseen for initiation and will farther assist specify what can be taken up by civil industry.

Possible Key Areas for Participation of Private Sector. Areas where the private sector can take part and where indigenisation is executable are indicated in Appendix ‘A ‘ . Mr Gurpal Singh, Deputy Director General, CII, stated that, CII want to speed up the reform procedure in the defense mechanism sector. He said that the effectual execution of the defense mechanism beginning policy can ease the soaking up and indigenisation of foreign aeronautic engineerings that accrue to the state by manner of offset trades. It would be appropriate here to discourse the function played by the Confederation of Indian Industries in gaining this effort by the private sector.

Alliance of Indian Industry ( CII )

Role of CII. The Confederation of Indian industries ( CII ) has played a important function in seeking to construct up a partnership between the Industry and Defence. The CII have been the innovators in organizing synergistic Sessionss between the defense mechanism forces and the industries and carry oning several events like the NIP ( Navy Industry Partnership meet ) , DEFCOM ( Defence Communication Seminar ) , Defence IT Conventions and The Defexpo India ( Asia ‘s largest land and Naval Systems ) exhibitions.

It had formed the Defence Division in 1993 to catalyze alteration in the Defence sector by prosecuting the Government to liberalize Defence Production and by originating the procedure of partnering with the Defence constitutions in organizing synergistic meetings with the terminal users, i.e. the Armed Forces. The aim of this division is to “ Establish a strong partnership between Defence Services and Industry and enlarge the function and range of Indian industry in defense mechanism production for common benefit and heighten the National Security ” .

Activities of the CII. Activities of the CII National Committee on Defence are divided under the undermentioned major caputs:

( a ) Defence Industrial Policy and Procurement Procedures

( B ) Trade Promotion

( degree Celsius ) International Linkages for Joint Ventures, Technology Tie-Ups and

( vitamin D ) Export

( vitamin E ) Advocacy / Consulting / Training Services


Can the Indian Industry Deliver?

“ Indian private industry should travel from peripheries to mainstream, ” observes Air Chief Marshall, PV Naik, Chief of Air Staff while talking at the booklet release ceremonial of the fifth International Conference on Energising Indian Aerospace: Accomplishments and Future Strategies, organised by the CII. He farther said that Indian Air Force has been urging private sector ‘s engagement in defense mechanism industrial base and indigenisation. However, the advancement has been a reticent one. Private sector entrepreneurship and invention can assist augmentation of R & A ; D base and creative activity of system integrating capablenesss. In fact, the state will bask two advantages by allowing greater civilian industrial sector ‘s engagement in defense mechanism production. First, on history of its complimentary character with province units, defense mechanism production will go more efficient and 2nd the part of R & A ; D more touchable.

Gearing Up for Challenges. The Indian Industry today is ready to presume such greater duty in doing the state self-sufficient in defense mechanism production. As stated by the Defence Secretary “ India is a turning market and emerging as a strong economic system. With the jutting growing of the Indian economic system, its defense mechanism demands are besides correspondingly turning. India, hence, offers first-class chances, both for domestic every bit good as foreign companies, to hammer new confederations and partnerships in the signifier of joint venture, co-production and co-development agreements in the Defence sector. ”

Designation of Specific Thrust Areas. To travel in front, there is a clear demand for dedicated groups consisting representatives from the Services, Department of Defence Production, DRDO and the Private Sector to turn to ‘specific thrust countries ‘ identified by each of the Services. These groups would be better able to specify demands, place the theoretical account and extent of engagement of the private sector, and work out the methodological analysis for engaging in with current acquisition processs and procedures. “ Printing the ‘Technology Perspective and Capability Roadmap, ‘ covering a period of 15 old ages, to portion the hereafter needs of our armed forces as brought out by the Defence Minister could be a right move. ”

Kelkar Committee – Raksha Udyog Ratna ‘s. The Vijay kelkar Comittee recommended to put up a twelve Indian private sector companies as Rakhsa Udyog Ratna ( RUR ) s with a position equivalent to that of the defense mechanism PSUs when it comes to offering for major defense mechanism contracts. The RUR Policy is an encouraging measure in the right way. Once the authorities identifies those Indian companies to be treated as RURs, the private sector would acquire a farther push towards set uping itself as a feasible surrogate to defence units in the domain. RURs will non merely convey para with State industries in footings of intervention, acquiring R & A ; D support, hammering partnership with others but with their expertness and resources they can take India towards ‘self -reliance ‘ .


To guarantee that the state maintains a believable defense mechanism capableness, there is an pressing demand for the authorities to step in and reform the bing administrative set-up and besides to set in topographic point a defense mechanism disbursement setup to guarantee optimal use of financess and long term position planning for both procurance and production. Very frequently the ailments of defense mechanism procurance and production point towards ruddy tapeism and the MoD.

The IN Maritime Strategy clearly states, “ We must prolong our futuristic enterprises and tackle the available capableness, substructure and resources, including rational capital, to the fullest extent to develop a vibrant and proactive Defence Industry. A strong and healthy partnership between the public and private sectors entirely will enable India to prolong a powerful defense mechanism industrial base for the hereafter, puting us steadfastly on the way of autonomy. Attempts to make synergism between private and public-owned industry, would be based upon the development of ‘core competency ‘ of each sector. ” Keeping in position these tenet recommendations are made in the subsequent paragraphs for the effectual engagement of private sector in the defense mechanism industry.

Need for Collaborative Approach. In the words of Def Secretary, “ We are besides looking for coactions in the field of Defence R & A ; D and affiliations in critical engineering countries in order to run into the demands of the Armed Forces through autochthonal beginnings to the extent possible. ”

Joint Ventures. The exponentially spread outing India ‘s defense mechanism industry base needs joint ventures to prolong the stage and to carve a niche, and to claim a topographic point in the planetary sphere of armament/defence production.

Conducting Awareness Campaigns. More Seminars, Work Shops, Def Expos be conducted on a regular footing for more interaction between the user ( armed forces ) and the manufacturer ( private industry ) to convey important awareness amongst each other and for better grasp of each other ‘s demands.

Amendments to Defence Offset Policy. Necessary amendments sing the debut of multipliers and backing answerability to DOFA be taken up on precedence.

Appendix A

( Refers to Para 32 )


1. Chemical and Non-Metal Materials.


Rubber and plastics.

New non-metal stuffs

2. Metallic element.

Iron and steel plants.

Basic metal industry.


Machinery and mechanical constituents.

3. Electrical Materials.


( B ) Power generator units.

( degree Celsius ) Electric overseas telegrams.

( vitamin D ) Electric engines.

4. Fabrics, Clothing and General Utilities.

5. Software and Systems Engineering.

6. Electronicss.

( a ) Semiconductors.

( B ) Electronic constituents.

( degree Celsius ) Opto-electronics.


Security systems and radio detection and rangings.

7. Shipbuilding.

8. Aerospace.

9. Vehicles.

10. Explosives.