Centre widens scope for more indigenisation in Defence sector

In a bid to encourage increased use and ownership of indigenous design and technology in the Defence sector, the Defence Procurement Procedure (DPP) notified in March has introduced a new category called Indigenous Design Development and Manufacturing (IDDM).

“It is one step ahead of pure manufacturing. We may have only 20 per cent indigenous content but if we have the design with us, we can always upgrade it, change it and customise it for our requirement and not be dependent on anybody,” said Sanjay Garg, Joint Secretary, Defence Industrial Promotion, Ministry of Defence.

Indigenisation A window of opportunity lies in the indigenisation process in the Defence sector. At present, in Defence procurement, nearly 65 per cent is import content. However, ownership of design and technology is where the issue of self-reliance and indigenisation comes in, he said at a CII conference on Defence Manufacturing Technologies on the theme of Defence Indigenisation - Window of Opportunities.

Under IDDM, domestically designed equipment with 40 per cent indigenous components or foreign-designed equipment with 60 per cent local components will be considered.

Innovation driven Defence is different from sectors like automotive or consumer durables. It is highly technology and innovation driven. An entrepreneur should be very patient as the demand is sporadic, and gestation period is high. It is more quality-sensitive than price-sensitive. Quality certification is important as ‘you are playing with the life of the soldier,’ he said.

Today, nobody needs an industrial licence from the Centre to manufacture parts or components. The MSME sector has been de-licensed, Garg said.

The FDI policy has made it simpler to have partnership with foreign players without any approval. The entry barriers for the private sector that existed till two years have been removed to a large extent, he said.

Single vendor The revised DPP has made significant changes in terms of category of procurement. Even a single Indian vendor has been accepted. Earlier, the tender was retracted if there was a single vendor, he said.

Jayakar Krishnamurthy, Conference Chairman and CMD of UCAL Fuel Systems Ltd, said Indian companies don’t spend enough on R&D. They should look at non-traditional partners like Defence Research and Development Organisation for innovation. They can also look at non-traditional countries such as South Korea, Japan, Canada, Argentina and Switzerland for tie-ups, he said.

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