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The face of the Indian defence sector is changing rapidly with a strong focus on indigenisation. The man leading that change is Manohar Parrikar, India’s defence minister. Parrikar has worked hard over the last one-and-a-half years to bring a complete turnaround in the defence establishment. 
 
In a latest interview, Parrikar spoke about his future plans and the key security issues facing the country. 
 
Q. The new Defence Procurement Policy (DPP) is being referred to as a game changing policy for the sector. How do you see it altering the Indian defence growth story? 
 
A. In the new DPP, we have tried to shift the focus on Make-in-India, small and medium scale industries. We are also stressing on time-bound procedures. 
 
The defence sector has a strange set of procurement procedures, which do not normally exist for other procurements. One obvious reason is that products need to be tested as unless successful testing is conducted, the costly equipment can’t be procured. So testing is a major criteria and this was, so far, not allowed to Indian private companies and was resulting into major delays. So the new DPP opens up testing facilities. Various defence PSUs are also offering facilities to the private sector. The new DPP will address these concerns of the industry in detail. 
 
Q. The <keyword id="6354869" type="UNKNOWN" weightage="20" keywordseo="make-in-India">Make in India</keyword> initiative is gaining steam. The new category of ‘Indigenously Designed, Developed and Manufactured’ (IDDM) equipment reverses the local mix from 70:30 to 30:70. Do you have any timelines for its implementation? 
 
A. It won’t happen overnight. In the new DPP for IDDM, it will be only now that things will be processed. Orders may be placed after one year and actual production will start after a year. So, it is in 2017 that we will start seeing the real impact. Of course, some push that we had given earlier would result in some shifting of the balance during the current year. 
 
Q. We see a sudden rush from big corporates who want to invest big time in the defence sector. Already some 50 MoUs have been signed and over 350 licenses given. Is there any kind of a mechanism that you are going to put in place to monitor that everything that is being talked about actually takes-off? 
 
A. Unlike other sectors, the buyer is only one except for exports, which we have opened up. In fact, the recorded NoCs for export granted by us in spite of the fact that we have reduced the number of items under restricted export in defence, has almost tripled as compared to last year and grown by five times the earlier years. We are now touching around Rs 2000 crore this year. I expect growth of another 50%-100% because of offsets. 
 
In the next year, we should cross Rs 1 billion in exports, which itself will be an achievement. Except the export part of it, the rest is produced and purchased by the Indian defence forces. These are part of preparations. These are not actual fructification. The fructification will happen in the current year for some in the private sector whom we are already placing orders with. In fact, Tata’s have developed 6x6 (truck for Indian army), Larsen &amp; Toubro is in the final stage of getting the order for self-propelled guns. 
 
Q. Will the entry of private companies affect the role of defence PSUs and DRDO? 
A. PSUs are also part of Make-in-India. We are asking them to broaden their vendor base and get products outsourced so that the private industry also develops in course. 
 
Q. Indian defence companies say their products are comparatively much cheaper to, say those supplied by US companies, like for example the ultra-light weight howitzers developed by the Kalyani Group is around 50% cheaper than that manufactured in the US. Aren’t we spending a lot for importing equipments like these? 
 
A. I am not aware of the costs but I will definitely find out. We are serious on indigenously developed products and I will talk to them. 
 
Q. Are you happy with the budget allocation? How would you in the present constraints of fund allocation priorities your plans on modernization? 
A. I don’t see a big fund constraint. Let me put it this way, in a month if a family eats say 20 kg of rice they may consume around 500 grams a day --- so budgets have to be seen in that angle. What do I require today? One is my committed liabilities. I am talking about capital acquisition so if I have placed orders with the vendors then as they supply I have to go and pay. For example, Apache Helicopter for which I placed the order in October. It will be supplied in 2018. Initially, I paid some 15%. The total including the weapon package was about Rs 21,000-22,000 crore. I paid only Rs 3000 crore. How much do I require as per the calibrated payment terms --- maybe I will require another Rs 1500 crore this year and Rs 1500 crore next year and maybe some Rs 5000 crore or Rs 8000 crore the year after. So what I do today has its impact in next 5-10 years and what was done in 2012-13 is going to reflect now. 
 
Q. What about China and Pakistan’s participation in the Defexpo? 
A. I don’t see a big issue in inviting or not inviting. Traditionally, they have not been invited but I think from China we had some people to visit if I am not mistaken. There is no calibrated decision specifically taken in this regard. 
 
Q. The double finance scrutiny first by MoD and then by finance ministry is making defence procurement cumbersome. Why should there be a double scrutiny at all? 
A. Ask that question to the finance ministry. If you ask me it is a triple level --- MoD, then our own finance department and then the MoF. I think it’s a case for a higher delegated power. It will be taken up but I don’t see it as a big problem. I have no problem in finance expenditure going through it. 
 
Q. Your comments on the government’s plans to cut foreign vendor contracts by 30% in the next two years? 
A. We don’t intend to cut. We intend to purchase locally so automatically the procurement from outside will reduce. 
 
Q. In Rafale jet deal pricing is a big issue? Even the law ministry has recently raised some objections? 
A. Price is equally important. While I want the aircraft, I will definitely be interested in the right price. The objections are being attended to. 
 
Q. Your government is completing two years in office? How do you think it has performed? 
A. I am happy because this government is doing more than reasonably well. The foundation is already there and lot of things have been done by this government which had been in limbo for last 10-12 years so I feel that in another one year we would be very clearly reaping the benefits of the seeds that have been sown by this government and things that have been done by this government.

Parrikar: Real impact of Make in India in defence sector will be seen in 2017

The <keyword id="43909" type="ORGANIZATION" weightage="100" keywordseo="Defence-ministry">defence ministry</keyword> is all set to rope in private players for mega military production orders. It has come up with a list of criteria that the private sector must fulfil. The ministry will unveil the elaborate procedure in a new policy soon. ET reported, a new strategic policy (SP) model will be created and six Indian companies will be accorded special status. Once the pool is created, the companies will be given the opportunity to bid for mega defence production orders, expected to be worth over $20 billion. Here is the list of norms that private players will have to fulfil: 1.In the first stage, six Indian companies will qualify to bid for four upcoming projects - <keyword id="117400" type="UNKNOWN" weightage="20" keywordseo="Submarines">submarines</keyword> for the navy, a single-engine fighter for the air force, helicopters and armoured vehicles for the army. The companies must have a minimum turnover of Rs 4,000 crore for the past three years. 2.Financial strength, technical capability and existing infrastructure will be the main criteria for selection of the Indian companies. For foreign players, the selection process will be based on technical and commercial grounds. 3.Foreign partners will be roped in for the four identified projects. This selection will be based on technical evaluations and field trials. Once the foreign vendors are shortlisted, the Indian pool will be invited to plan collaborations and present joint proposals that will be the basis of a final selection. 4.Only one Indian company can participate in only one strategic partnership project. "The defence ministry will shortly invite companies for the qualification process. The companies will be asked to give their priority preference for the four projects. A total of six companies will be selected based on financial parameters and capability,” a senior official told ET.

Defence Ministry is ready to give production orders to private sector. Here are the norms they must fulfill

The Ministry of Defence will soon come out with a new set of guidelines and norms that will work as Standard-Operating-Procedures (SOP) for foreign companies seeking higher ownership beyond the existing 49% foreign direct investment (FDI) that is currently allowed in defence production.<o:p></o:p>
 India’s <keyword id="2619377" type="UNKNOWN" weightage="20" keywordseo="defence-minister-Manohar-Parrikar">Defence Minister Manohar Parrikar</keyword> has already stated that he was open to considering higher FDI in defence production on a case-to-case basis. However, presently, there are no guidelines or SOP in place to decide on cases where higher foreign ownership is proposed.

	“India may soon announce guidelines to increase the 49% cap on foreign direct investment (FDI) in defence production allowing foreign companies, with the latest cutting edge technology, to set shop in the country. These guidelines are being finalised so that the department of defence can take a view on the dozen odd proposals by leading global players,” said a senior government official.<o:p></o:p>

	At a recent meeting of the top brass of defence ministry with the industry, it was indicated that the norms and guidelines for allowing over 49% FDI in defence production are being finalised.<o:p></o:p>

	Sources in the know said a draft Cabinet note has been readied in this regard following inter-ministerial consultations on the issue of higher FDI in defence production.

	However, as against having fixed norms, the department of defence is understood to have proposed taking a view on a case to case basis and on the merits of the proposal.<o:p></o:p>

	French company DCNS has proposed to set up a wholly-owned Indian subsidiary to develop advanced systems for submarines.

	“Many foreign companies have approached the government to set up wholly owned Indian subsidiaries to develop crucial modern defence systems. But due to lack of guidelines, the clarity is missing and global companies have expressed concerns on the same. These new guidelines will detail a specific roadmap for international companies that are planning to make big investments in India’s defence production,” an official said.<o:p></o:p>

	“Our FDI norms will need to watch out for the real intents and the encumbrances on the technology flow through export controls and denial regimes to make Make-in-India a success,” he said.<o:p></o:p>

	“The caution indeed has to be exercised as going by the past experience, whenever a new sector is opened up there is a honeymoon time that gets in many new entrants. Aviation sector is one such glaring example to point. All new entrants use high pitch and try to create differentiators but they will have to eventually deliver promises through building shear track record through physical delivery on a sustained basis,” said an industry source.<o:p></o:p>

	So while the government puts in place these new norms and guidelines, care needs to be taken that this does not result in mere creation of a “front” but instead build skill sets and capabilities to enhance indigenous content.<o:p></o:p>

	The need of the hour is to create centres of excellence to enhance not only the indigenous content but gradually built sustainability through geographic spread of markets in a calibrated way, said an industry leader.<o:p></o:p>

	This, he said, is welcome as the Indian requirements are diverse and technologies constantly move with time needing fresh inputs in technology all the time.

	​(Anupama Airy is the Founder and Editor of EnergyInfraPost.com and DefenceAviationPost.com. She can be reached at <a href="mailto:anupama.airy@gmail.com" target="_blank">anupama.airy@gmail.com</a>​, Twitter handle: @anupamaairy)

	<o:p> </o:p>

Foreign cos can own up to 74% in Indian defence soon, on a case-to-case basis

Going by the data presented by Minister of State for Defence Rao Inderjit Singh in parliament on Tuesday, the <keyword id="6412360" type="UNKNOWN" weightage="20" keywordseo="Defence-Sector">defence sector</keyword> stood at the bottom of the list of sectors that received foreign investment this year with merely Rs 56 lakh in its kitty. 
 This is despite the persistent government efforts to market India as a defence manufacturing hub ever since last year when the norms were eased by the <keyword id="65795" type="ORGANIZATION" weightage="20" keywordseo="BJP-government">BJP government</keyword> last year in August, including FII <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword> upto 24 percent on automatic route. 
 This dismal <keyword id="44528" type="ORGANIZATION" weightage="20" keywordseo="FDI">FDI</keyword> inflow was the reason why another set of big changes was announced by the government in November in defence FDI. The changes included FDI upto 49 percent through automatic route, permissions to be taken from FIPB beyond 49 percent, besides FVCI and portfolio being also permitted 49 pc through automatic route. 
 However, while the government made it easier for foreign investors to venture into the defence <keyword id="6395867" type="UNKNOWN" weightage="20" keywordseo="manufacturing-sector">manufacturing sector</keyword>, it shied away from being liberal on the FDI limit, capping it to 49 percent under the new automatic process, a bone of contention for investors who desire a controlling stake. 
 
Other significant sectors like Glue and Gelatin, Dye Stuff and Scientific Instruments beat the investments into the defence sector exponentially. 
 
(image credit: BCCL)

Government fails to attract FDI in Defence Industry, only Rs 56 lakh since Sept last year

The <keyword id="76451" type="COMPANY" weightage="60" keywordseo="Adani">Adani</keyword> Group is planning to invest in <keyword id="32723" type="COMPANY" weightage="60" keywordseo="Defence">defence</keyword> and aerospace production, thanks to Modi’s '<keyword id="6354869" type="UNKNOWN" weightage="80" keywordseo="make-in-India">Make in India</keyword>' campaign. 
 
According to media reports, the company is in talks with international defence companies for a strategic partnership to set up a defence manufacturing hub in India. It has been pitching its main asset — the country's largest private port with it’s sea and land links and the SEZ at Mundra in Gujarat. 
 
Sweden’s Saab is among the few companies being approached for these partnerships. The Swedish giant is already eyeing to set up production facilities in India. It wants major projects like the Rs 60,000-crore P-75I submarine contract and has proposed to manufacture the light Gripen fighter jet in India. 
 
Sources say Adani may also consider defence firms like Italy's Finmeccanica and US based Textron. The later owns BAE, which is being reviewed for a $700 million contract to supply howitzer guns to India. 
 
The Adani Group is the first among large Indian conglomerates to want to invest in defence and aerospace. Just last month the group has applied to the department of industrial policy &amp; promotion for a licence to manufacture helicopters under a new name — Adani Defence Systems &amp; Technologies Ltd. The sector has immense potential given that the country is one of the world's largest spenders in this area. 
 
(Image credit:Adani)

Watch out! Adani may raid the defence sector

The Cabinet Committee on Securities (CCS) will grant its final approval on the inclusion of Strategic Partners (SPs), a model that the government plans to enter into with private firms in critical and high-end defence projects like building submarines, helicopters and fighter planes requiring long term commitments, both ways.<o:p></o:p>
 Significantly, the government is keen to institutionalise an independent regulator to deal with private sector players that would be chosen as strategic partners for major <keyword id="3339557" type="UNKNOWN" weightage="20" keywordseo="defence-manufacturing-programs">defence manufacturing programs</keyword>. This independent regulator will be outside the purview of the Ministry of Defence and provide flexibility with unbiased view.<o:p></o:p>
 Defence Minister <keyword id="6363133" type="PERSON" weightage="40" keywordseo="Manohar-Parrikar">Manohar Parrikar</keyword> met senior industry representatives on April 25 and held open and frank discussions over the “strategic partnership” issue, which he assured will be evolved “through consultative process and over the next one month.”<o:p></o:p>

	“We are expecting to finalise the model by May end and there could be few more meetings, as needed,” a senior defence ministry official said. “The final paper --- after making constructive improvements --- will be taken up for finance approval and then put up to the CCS,” he added.<o:p></o:p>

	The move to appoint an independent regulator is also in line with the recommendations of the government appointed panel --- <o:p></o:p>

	VK Aatre led task force on selection of strategic partners –that has suggested an independent regulator and a special auditing wing to deal with private sector players chosen as SPs. <o:p></o:p>

	“A regulator will be put in place as existing policies procedures and mind sets are rigid and do not allow flexibility needed for technology intensive programs needing pragmatic view in contracting and monitoring,” sources who attended the meeting said.<o:p></o:p>

	Sources added that Parrikar assured the industry players that strategic partner model will be utilised only for very complex and technology intensive programs (more like single party buying process but after following due selection process). <o:p></o:p>

	The minister further asserted that wherever multiple sources are feasible and where certainty is higher, programs will go by the “Buy and Make (Indian)” route and the Strategic Partners model will be for just 3-4 select segments.<o:p></o:p>

	On queries by the industry, Parrikar said P75(I) submarines, helicopters and fighter aircrafts could be the segments that will be looked into for selection of SPs. Light Combat Aircraft MK2 itself could be pursued under the SP route. “With multiple helicopter and fighter programs there could be one or two strategic partners in either,” sources said.<o:p></o:p>

	Industry seniors who attended the meeting included those representing industrial chambers CII, FICCI, Assocham, PHD Chambers of Commerce.<o:p></o:p>

	The meeting comes after reservations were expressed in certain quarters over the concept which calls for identifying one or two partners in key defence manufacturing fields.<o:p></o:p>

	MoD had set up in May 2015 a committee of experts for amendments to DPP2013 and formulation of policy framework for “Facilitating Make in India” in Defence Sector through Defence Procurement Procedure. <o:p></o:p>

	This committee, chaired by Dhirendra Singh, in its report in July recommended Strategic Partnership Model with Private Sector Industries for high-end defence production. After Acceptance of these recommendations, a task force was constituted by the defence ministry for selection of Strategic Partners under former DRDO chief V.K. Aatre as chairman.<o:p></o:p>

	The committee's report had been submitted in Jan 2016, and it has categorised the sectors into two groups. The first group includes platforms like aircraft, helicopters, aero engines, submarines, warships, guns, including artillery guns, and armoured vehicles including tanks, and it has been suggested that only one partner should be finalised for these platform programs.<o:p></o:p>

	The second group includes strategic materials like metallic material and alloys, non-metallic material, including composites and polymers, and ammunition including smart ammunition, for which the Task Force said two partners can be identified.

	(Anupama Airy is the Founder and Editor of EnergyInfraPost.com and DefenceAviationPost.com. She can be reached at <a href="mailto:anupama.airy@gmail.com" target="_blank">anupama.airy@gmail.com</a>​, Twitter handle: @anupamaairy)

	(Image: Indiatimes)

Exclusive: An independent Defence Regulator soon for any private strategic deal

<keyword id="3658" type="COUNTRY" weightage="80" keywordseo="India">India</keyword> is planning to ensure eligibility is simplified foreign defence equipment manufacturers to invest up to 100% in Indian ventures as part of the big-ticket reform package to be rolled out before the winter session of Parliament. 
 At present, India allows up to 49% foreign direct investment in the <keyword id="6412360" type="UNKNOWN" weightage="80" keywordseo="Defence-Sector">defence sector</keyword> and up to 100% <keyword id="44528" type="ORGANIZATION" weightage="80" keywordseo="FDI">FDI</keyword> is allowed in projects involving state of the art technology, to be approved by the Cabinet Committee on Security on a case to case basis. 
 
The government has begun discussions to bring clarity on what 'state of the art' implies so as to expand the basket of products to become eligible for higher foreign investment and reduce the country's reliance on imports, a top government official said. "We are looking at simplifying the overall framework," the official told ET. 
 
"A number of sectoral conditions do not mean much and create unnecessary deterrent." Another government official said that there are a host of conditions specified in FDI policy that even cover appointment of chief security officer. The government plans to streamline and simplify these conditions, particularly for dual use products. 
 
The proposal is expected to be finalised shortly, the second official said The Narendra Modi-led government considers defence production as one of the focus areas to ramp up the country's manufacturing sector, which is slowly moving back towards recovery. 
 
Image credit: Indiatimes

It’s going to be
much easier for foreign weapons makers to start business in India soon!

A digital microscope to see cells in 3-D, a helmet whose strap tightens with the click of a button and components which make buildings earthquake resistant, IIT-Delhi's recent 'Open House' displayed the kind of innovations that are taking place within the campus, but to be put into use by the outside world. While some innovations are near completion, others have even been patented and are now being used by the industries. History is testimony to the fact that what these students have crafted have been making a difference in our lives. While benefiting the common man, there's one more area that <keyword id="137562" type="PERSON" weightage="20" keywordseo="IITians">IITians</keyword> have contributed to - Defence. Let's for instance take the example of a material called aluminium cenosphere syntactic foam. Work is on so that this can be used to place as a layer in buildings, bridges and flyovers to protect them from collapsing or suffering severe damage during a bomb blast. Another example is that of helmets being used by the <keyword id="6354416" type="ORGANIZATION" weightage="20" keywordseo="Indian-Army">Indian Army</keyword>. It can only protect a soldier from splinters, rocks and a bullet that only grazes the helmet and is not directly hitting it. But the helmet being made by IIT-Delhi will contain layers of varied materials, including ceramic and cellular foam, which will blunt the bullet, reduce its velocity and absorb its energy. The new helmet will make sure the bullet does not penetrate the helmet there is no 'back face signature', which is a deformity caused on the helmet by the bullet. IITians have also given the defence sector several <keyword id="94769" type="UNKNOWN" weightage="20" keywordseo="drones">drones</keyword>. whoch are being used in anti-combing operations in <keyword id="21647" type="ORGANIZATION" weightage="20" keywordseo="naxal">Naxal</keyword> areas, for surveillance under waters and to check movements on our borders. S. Basu, Assistant Dean, Research and Development, Indian Institute of Technology-Delhi recently said - "the institute's collaborated with <keyword id="490397" type="ORGANIZATION" weightage="20" keywordseo="Defence-Research-Development-Organisation">Defence Research Development Organisation</keyword> (<keyword id="6355142" type="ORGANIZATION" weightage="20" keywordseo="DRDO">DRDO</keyword>), wherein the former will receive Rs 230 crore over five years to build technologies to thwart mine attacks, assess their impact, and to build a "spy-balloon" -- conceptualized as a drone -- among others." Let's wait to see the kind of innovations that come out of our premier institutes in the days to come!

IIT student innovations empower India's defence sector like never before

<keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>'s <keyword id="19938893" type="General" weightage="20" keywordseo="defence-exports" source="keywords">defence exports</keyword> have surged from Rs 15 billion in 2017 to Rs 210 billion in 2024, registering a CAGR of 46 per cent, highlighted a report on 'Defence Conference 3.0' by Antique Stock Broking. The report stated that the <keyword id="20861069" type="General" weightage="20" keywordseo="global-shift" source="keywords">global shift</keyword> towards a China+1 strategy and the impact of the <keyword id="20016971" type="General" weightage="20" keywordseo="Russia-Ukraine-war" source="keywords">Russia-Ukraine war</keyword> offer India additional opportunities to fill supply chain gaps, potentially boosting its share in the <keyword id="23046732" type="General" weightage="20" keywordseo="global-defence-industry" source="keywords">global defence industry</keyword>. The report noted that the country's long-term goal is to become a global defence manufacturing hub is driven by Defence Public Sector Undertakings (DPSUs), private enterprises, start-ups, and MSMEs. "Indian defence exports have grown multi-fold from INR 15 bn in 2017 to INR 210 bn in 2024 at a CAGR of 46%. The China + 1 strategy and the Russia-Ukraine war provides an additional opportunity for India to fill the gap created in the supply chain and hence increase its contribution to the global defence industry," the report read. The report added that to achieve this target a well-developed domestic ecosystem is crucial as lower import content in products accelerates approvals by reducing international conflicts. The report added that the Ministry of Defence has taken key initiatives to attract Indian private players and global Original Equipment Manufacturers (OEMs) include establishing aerospace parks and defence corridors, fast-tracking project approvals, and enhancing development and testing facilities. Highlighting the potential in India's Maintenance, Repair, and Overhaul (MRO) segment the report explained that it holds a significant potential for global aerospace companies due to its technical expertise and cost-competitive solutions. "India provides a huge opportunity in the <keyword id="23046733" type="General" weightage="20" keywordseo="MRO-segment" source="keywords">MRO segment</keyword> for global aerospace leaders given the expertise the country provides as well as the cost efficiency solutions compared to its global competitors" the report added. India aims to increase domestic defence turnover to Rs 3 lac crore by 2029, Rs 500 billion targeted for exports. This growth will help reduce the Government of India's import bill as India remains the world's largest importer of defence equipment. Under the Atmanirbhar Bharat initiative of the government, 75 per cent of the defence capital outlay is now reserved for domestic players, up from 49 per cent in FY21. Given the geopolitical challenges and modernisation needs of its Armed Forces, the report added that India plans to invest Rs 8.3 lac crore in domestic procurement, offering substantial business opportunities for local companies. "India intends to place orders worth INR 8.3 trn through domestic procurement and thus it presents a massive business opportunity for local players" it added. As per the Ministry of Defence, India's defence manufacturing sector has witnessed an increase of 16.8 per cent in the fiscal year 2023-24. This significant increase marks the highest-ever growth in the country's defence production value. The total value of defence production reached Rs 1,26,887 crore this year, up from the previous year's figures.

India's defence exports surge to Rs 210 billion after global shift towards China+1, Russia-Ukraine war: Report

It won’t be that easy to enter defence sector through <keyword id="6354814" type="UNKNOWN" weightage="20" keywordseo="prime-minister-Narendra-Modi">Prime Minister Narendra Modi</keyword>’s ‘<keyword id="6354869" type="UNKNOWN" weightage="20" keywordseo="make-in-India">Make in India</keyword>’ initiative as private players will have to go through a grilling process. 
 
A panel led by former DRDO chief VK Atre has suggested five areas and a three-step selection process through which private players will get manufacturing projects worth over Rs 10,000 crore. 
 
The panel suggests prioritising areas like aircraft, helicopters, submarines, armoured fighting vehicles and ammunition and only one company would be eligible for only one sector. 
 
It also recommended a minimum lock in period of 20 years. In case the private player is unable to perform, the government will have all rights to gain control of the firm. 
 
In order to identify private players, entry would be based on financial and technical parameters, followed by verification and then past performances. 
 
(Image: reuters)

Here’s how India will probably select its strategic partner for ‘Make in India’ in defence sector

Minister of State for <keyword id="32723" type="COMPANY" weightage="20" keywordseo="Defence">Defence</keyword> Subhash R Bhamre indicated the Indian government may cut the <keyword id="45134" type="UNKNOWN" weightage="20" keywordseo="Defence-budget">defence budget</keyword> by half within a decade. 
 
Bhamre said around $14 billion worth of defence offset obligations would be discharged in India by foreign original equipment manufacturers (OEMs) by 2028 and the defence industry has the potential to become a huge foreign exchange earner and also lead the country to its professed goal of self-reliance. 
 
"Nearly $14 billion worth of defence offset obligations will be discharged by the foreign OEMs by 2028," he said. 
 
Bhamre said India spends approximately 40 per cent of its total defence budget on capital acquisitions, and about 60 per cent of defence requirements are met through imports. 
 
"The present government has emphasised on indigenous manufacturing to reduce the defence budget by 50 per cent within a decade," the Union minister said. 
 
"There is an urgent need for innovation in the defence manufacturing sector with increased focus on R&amp;D and to prepare a pool of human resource expertise which will help in making equipment and technologies cheaper," he said. 
 
Thanks to the Centre's 'Make in India' campaign, the defence sector has moved from the periphery to the core of Indian manufacturing, he pointed out. 
 
"The sector not only has the potential to augment manufacturing but also add nearly one million direct and indirect jobs," Bhamre said. 
 
He also said the government is taking steps to bring in a framework that encourages collaboration between public and private sector companies for defence export based on public private partnership model. 
 
"The DPSUs (Defence Public Sector Undertakings) and private sector should also put in place a system to share the capability and capacity to support overseas sales, servicing and maintenance throughout the life of the product," he said. 
 
Pointing out that the human resource capacity in the private sector has already demonstrated its worth in fields of automobile, IT and service sectors at global platform, he said the government is trying to replicate the same model by inducing private sector and foreign OEMs to invest in defence manufacturing.

India may cut defence budget by 50% within a decade

The government has permitted <keyword id="44749" type="ORGANIZATION" weightage="20" keywordseo="Foreign-Direct-Investment">foreign direct investment</keyword> (FDI) of up to 74 per cent under the automatic route in the defence sector with a view to attracting overseas investors, according to a press note issued by the DPIIT on Thursday. However, foreign investments in the defence sector would be subject to scrutiny on the grounds of national security and the government reserves the right to review any foreign investment in the sector that affects or may affect national security, the Department for Promotion of Industry and Internal Trade (DPIIT) said in the note. As per the current FDI policy, 100 per cent overseas investments are permitted in the defence industry -- 49 per cent under the automatic route, while beyond that government approval was required. According to the Press Note 4 (2020 series): "FDI up to 74 per cent under automatic route shall be permitted for companies seeking new industrial licences". It also said that infusion of fresh investment up to 49 per cent, in a company not seeking industrial licence or which already has government approval for FDI in defence, shall require "mandatory" submission of a declaration with the defence ministry in case change in equity/shareholding pattern or transfer of stake by existing investor to new foreign investor for FDI up to 49 per cent, within 30 days of such change. Proposal for raising FDI beyond 49 per cent from such companies will require government approval, it added. "The decision will take effect from the date of FEMA (Foreign Exchange Management Act) notification," it said. The decision to permit up to 74 per cent FDI in the <keyword id="2377476" type="PERSON" weightage="20" keywordseo="defence-manufacturing">defence manufacturing</keyword> through the automatic route was announced by Finance Minister Nirmala Sitharaman in May while announcing the fourth tranche of the Rs 20 lakh crore stimulus package for the coronavirus-hit economy. In July 2018, the government had relaxed foreign direct investment norms in the defence sector by allowing up to 49 per cent FDI under the automatic route. The move was aimed at boosting domestic industry as India imports about 70 per cent of its military hardware. According to the DPIIT data, defence industries has received FDI equity inflows of USD 9.52 million (Rs 56.88 crore) during April 2000 and March 2020. Under the government route, foreign investors have to take prior approval of the respective ministry/department, while in the automatic route, the investor just has to inform the RBI after the investment is made. Total FDI into India increased by 18 per cent to USD 73.45 billion in 2019-20. SEE ALSO: <a href="https://www.businessinsider.in/sports/news/dailyhunt-app-founders-confirm-ipl-2020-associate-sponsorship/articleshow/78169667.cms">EXCLUSIVE: Dailyhunt founders confirm IPL 2020 associate sponsorship — promise new release for Josh ahead of India’s biggest cricket tournament</a> <a href="https://www.businessinsider.in/stock-market/markets/news/hcl-tech-enters-the-list-of-top-10-most-valued-companies-in-india/articleshow/78165311.cms">HCL Tech enters the list of top 10 most valued companies in India</a> <a href="https://www.businessinsider.in/science/space/news/first-intact-planet-found-circling-a-dead-star-this-jupiter-sized-anomaly-is-in-orbit-rather-than-being-pulled-apart-at-the-seams/articleshow/78166938.cms">First 'intact' planet found circling a dead star — this Jupiter-sized anomaly is in orbit rather than being pulled apart at the seams</a>

Foreign investors can now pump in up to 74 % FDI under automatic route in India's defence sector

India’s Defence Minister <keyword id="6363133" type="PERSON" weightage="40" keywordseo="Manohar-Parrikar">Manohar Parrikar</keyword> said all terror incidents in the country should be treated as war and running commentary can put security personnel in danger. 
 
Parrikar hinted at media restrain, saying security forces have to ensure that enemies don’t escape. 
 
“Incidents of terrorism have to be treated as a war. You cannot have a running commentary about such operations on television etc. This puts security forces in danger,” the minister had said in Lok Sabha recently. 
 
“Why does someone engage in terrorist or guerilla warfare? Guerilla warfare is adopted when a small enemy cannot bring down the big one, so he continuously nibbles or bites the big enemy piece by piece and he knows his fighter is not going to defeat the Indian army. So they know they are on a suicide mission but still they come because they want big publicity and they want to create some sort of psychological impact. If we treat it as a war and don’t start analysing it as we analysed Pathankot, I think that would stop the attacks. Then the full ecosystem of the attacks is nullified,” said Parrikar. 
 
Defence experts welcomed Parrikar’s comments. 
 
“If this country had valued the life of its soldiers and ordinary citizens, it would have taken a similar stand against terror attacks from the very beginning. We can’t have a terror strike every month and behave that everything is normal. I am glad that the defence minister has spoken on this subject. His views will boost the morale of the defence forces,” said a defence analyst. 
 

	(Anupama Airy is the Founder and Editor of EnergyInfraPost.com and DefenceAviationPost.com. She can be reached at <a href="mailto:anupama.airy@gmail.com" target="_blank">anupama.airy@gmail.com</a>​, Twitter handle: @anupamaairy)

You Searched For "defence sector" and got 13 results

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