India is inviting foreign defence companies to start in the country as a part of the Make in India initiative and this would be an important step in boosting the economy.
India has a big shopping list worth billions of dollars for the following essentials,
- foreign fighter jets
- armored vehicles
However, deals will be signed only if these are made in India or Make in India.
NEW DEFENCE POLICY
The country has declared a new policy regarding importing defence requirements. Accordingly, foreign companies can start their outlet here as minority partners. From July, defence sectors started to receive applications for submarines.
Foreign companies see this as an opportunity too good to miss.
Europe’s Airbus group is planning for a sale of its Panther helicopters. They said that if a contract worth billions is obtained, India will be its global hub for multipurpose. The company’s current hub is in Marignane, France.
France’s Naval Group and Germany’s ThyssenKrupp Marine Systems are ready to compete for a contract of $10 billion in the South Asian country to build submarines.
Prime Minister Narendra Modi is also under a lot of pressure to create more job opportunities for thousands of unemployed people in India.
The economy growth in the first quarter of 2017 has slowed down to 6.1 percent. Experts expect a further reduction due to struggle to adopt the implemented GST (Goods and Services Tax ) in July.
MAKE IN INDIA
India is trying to follow some countries which developed defence sectors by
- backing few big companies with long-term orders
- allowing small companies to develop in their area
Mr Amber Dubey of the KPMG consultancy in India spoke about the country’s defence sector to AFP. He said that countries having a robust defence system have few big companies that are supported by the government with long-term orders. In addition, he also said that this creates a competitive eco-system with small and large suppliers.
Nevertheless, India is now importing almost 90 percent of defence requirements including parts. It is depending on foreign companies for new technologies.
Lowest bidders have a greater advantage in signing deals. This is a worry for some of the competitors.
Mr Cara Abercrombie, former US deputy assistant secretary of defence for southeast Asia told about this concern. He said that he wants to see the Indian government and US government to discuss the selection criteria because US companies cannot quote lowest price.
The defence sector will provide a list of domestic companies in India later. Then the foreign companies have to choose any of these domestic companies to start their local plants. India will be benefitted by all means through this policy.