Jan 14. 2011
India Confirms MMRCA Ineligible For New Offset Policy
Jan 13, 2011
| By Neelam Mathews |
| Indian Defense Minister A.K Antony says the defense ministry’s new, more liberal offset policy will not be applicable to the country’s largest defense procurement, the Medium Multi-Role Combat Aircraft (MMRCA), quashing the hopes of many vendors.|
Program offsets require foreign vendors to provide work for Indian industry up to a certain percentage of the program’s value. The $11 billion MMRCA project was viewed as a potential major boost to India’s still-maturing defense industry.
“The new policy will be applicable to requests for proposals issued from January 2011 onwards,” Antony says.
“This is a big disappointment,” says Puneet Kaura, executive director of Samtel Display Systems. “We see it as an opportunity lost. We would have been pleasantly surprised if the MMRCA and other projects had been incorporated under the new policy.”
The new Defense Production Policy — a 6-page document with 16 points — places an emphasis on indigenous design, development and manufacturing of defense equipment.
“The Ministry of Defense is encouraging [the] participation of the Indian industry and supporting them to become self-reliant,” says Nidhi Goyal, director of Deloitte’s Indian aerospace and defense team. “We need to wait and see how effectively the government works with the private sector to develop indigenous platforms and systems, given the limitations of time and technology that may be available in the country.”
“Self-reliance is our motto, but it is still a distant dream,” Antony says. Nonetheless, he stresses the need to “substantially reduce dependence on foreign suppliers,” adding that the main thrust of the revised policy is “speedy indigenization.”
But industry is skeptical, given the government’s continued reliance on public sector companies such as Hindustan Aeronautics Ltd., which still perform the bulk of the work on Indian defense projects. “We will protect the public sector units and strengthen them,” Antony says. “Our thrust is to have a strong defense industrial base. The level playing field [will be brought about] in a phased manner. Rome wasn’t built in a day.”