Opinion- DPP 2013-We need to start thinking for ourselves

Neelam Mathews

March 17, 2013 

"Within a few months we are going to change the defense procurement procedure again,” Defense Minister A.K. Antony told Parliament recently, sending shudders down the spines of OEMs who privately voiced their opinion saying this is was a kneejerk reaction to the Augusta Westland scam.

Though I am not opinionated and not questioning whether this is right or wrong, good or bad, one wonders if this kneejerk reaction is the way we will design our policies and planning in the present and future? 

Calling indigenization the “ultimate solution to the scourge of corruption…. (and) Because of the operational necessity of the services, on the request that they need the most modern equipment to meet the operational necessity, the Government moves to import any high-value equipment from foreign sources,” Antony said." Here we go again!  Always a loophole!

Many OEMs would react to the fact that indigenization and build-out of defense industrial base can happen with responsible FDI allowance and if a company is able to control majority ownership of a JV on India's soil, this will bring sensitive technology and manufacturing know-how to the Indian private and public sector. Somehow, the issue of transfer of technology is not being discussed in the equation.
While OEMs who have yet to build confidence in a sector that is in its infancy with no audit nor implementation procedures to protect IPR, the 26% of FDI is being viewed as an “injustice.” Honest firms ready to play by the rules are "very frustrated by these sideline games being played and they are held hostage to the process not being followed by a dishonest few," an OEM tells AerospaceDiary. We are told by an Indian manufacturer: “It is a question of sovereignity. It is a new chapter in the US-India relations (for instance). Trust is earned and we've had just a partial period of the Bush Presidency and Obama’s one term to have confidence that the trust is for real.”

While there have been issues with dud software being provided as offsets, limiting software as an offset, has direct ramifications on the ability for OEMS to transfer technology, and is a shortsighted measure. Revoking software as a benefit is going to hurt DRDO when technology valuation must be gauged as a part of the offset contract. What are the implications for the software as part of a pilot training simulator?? 

Here at AerospaceDiary, we think it all comes down to checks and balances that India has not as yet built into its system.

Only time will tell whether the policy will work or is doomed for failure.