Having committed itself to greater indigenisation in the defence sector, the government will soon come out with a new defence procurement policy, under which it will place orders with companies that have invested in research and development.
The government will encourage research and development by sharing the cost, a move it hopes will galvanise the private sector to devote resources and time to developing major platforms needed for the armed forces.
“If there are two Indian companies bidding for the same tender, L1 [the lowest bidder] will get 60-65 per cent of the order’s share and L2 [the second lowest] 30-35 per cent,” R.K. Singh, Secretary, Defence Production, said at a press conference ahead of the sixth DEFEXPO 2010 that begins on Monday.
The aim, he said, was to increase the indigenous capability and sustain the interest of the other company that invested in research and development. At present, 70 per cent of the defence procurement was done through imports, a trend the government wanted to reverse.
The government had sought the views of stakeholders and would unveil the policy in the next two months.
However, its important consideration would be that the armed forces should get the best systems available, Mr. Singh said. While procuring, the government maintained both equity and transparency.
As for exports, Mr. Singh said that last year India exported arms, armaments and ammunition worth Rs. 400 crore. By December 2009, the figure touched Rs. 300 crore.
Exports were incidental as the defence production units catered primarily to the country’s requirements, and only spare production was being exported.
“Our industry is for our requirement and we are fully utilising the capacity. Only when we can spare, we export,” he said.
The DEFEXPO this year has grown both in space and participation. The number of participants this year will be 650, against 447 in 2008. The number of countries has risen to 33 from 29.
There will be at least 41 official delegations, including Ministers from Nigeria, Senegal, Turkey, Brunei, Israel, Italy, and Namibia.
With the Indian defence market growing in size and the country expecting to spend $50 billion on modernisation of the armed forces, a number of weapons manufacturers from countries, including the U.S., Europe and Israel, are showcasing their wares and out to capture a share from Russia, India’s traditional defence supplier.