E cacy of Defence Procurement Procedure and Manufacturing Policies of India to Enhance

Self Reliance in Defence Aerospace Manufacturing

I am Rabi Kumar Patra, Chief Manager (Finance), HAL, perusing my M. Sc Degree at Defence Services Staff College, Wellington.

India is in a strategically-vulnerable position of being the world’s largest arms importer, accounting for 12% of the global imports during 2013-2017. A Country aspiring to be
a regional super power cannot inde nitely depend upon imports for defending its boundaries. For self reliance in the defence manufacturing, Government had formulated
various policies from time to time.

In this backdrop, as part of my course I am doing a dissertation on the “E cacy of Defence Procurement Procedure and Manufacturing Policies of India to enhance Self
Reliance in Defence Aerospace Manufacturing”.

You are requested to take out your precious time and provide answers to the following questions for facilitating the study.

Email address *

sujan.industries@gmail.com

Name

Anil

Organization

SUJAN INDUSTRIES

1. What proportion of your turnover is from defence-related business? *

Less than 10%

Between 10% and 25%

Between 25% and 50%

Between 50% and 75%

More than 75%

Other:

2. Are you directly supplying to Ministry of Defence or to Defence Public Sectors or Ordinance Factory Boards? *

Directly to Ministry of Defence

Defence Public Sectors and Ordinance Factory Boards

Both (i) and (ii)

Other:

3. How many times over the past three years have you been directly contracted by MoD or Service Head
Quarters for supply of defence products and services? *

Less than ve times

Five to 10 Times

More than 10 Times

Other:
4. Which of the following issues are the major obstacle you have encountered while bidding for defence
contracts tendered by MoD or Service Head Quarters? (Please rank, 1 being the most important) *
1 2 3 4 5 6

Less time for

preparation and
submission of the
response to the
Tenders

Costs associated with

bidding for contracts

Large upfront costs

(e.g. R&D costs)

Size of the contracts

being small

Stringent RFQ
requirement vis-a-vis
nature of procurement
(all the DPP provisions
are required to be
complied to even for
small value contracts)

One sided Contract

Clauses

5. Do you think that the Government has been successful in making the defence manufacturing climate
favourable by undertaking various policy initiatives in the last three year? *

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

6. According to you what are the major deterrent to growth of Defence manufacturing industry? (Please rank, 1
being the most important) *
1 2 3 4 5 6

Lack of Clarity and

consistency in the
Policy Regime

Uncertainties in the
order fructi cation

Lack of incentives
promoting R&D in
Defence
manufacturing

Poor Infrastructure and

lack of ecosystem

Lack of long term

visibility into the
requirements of the
armed forces.

Multiple clearances
and licences before
commencement of the
Production.
7. Do you think that 100% FDI in Defence Manufacturing would boost defence manufacturing in aviation sector?
*

Yes

No

Cannot Say

8. According to you what should be the prioritization of Capital Acquisition Categories de ned in the DPP 2016.
(Please rank, 1 being the most important) *
1 2 3 4 5

Buy (Indian - IDDM)

Buy (Indian)

Buy and Make (Indian)

Buy and Make

Buy (Global)

9. How much Indigenous Content (IC) has been achieved/could be achievable in your Products? *

Less than 10%

Between 10% and 25%

Between 25% and 50%

Between 50% and 75%

More than 75%

Other:

10. What are the reasons for not achieving a higher Indigenous Content or resorting to Imports? (May choose
multiple options) *
Non availability of Indigenous Materials

Certi cation issues with the indigenous materials

Non-competitive price of Indigenous Materials

11. According to you what are the factors that could complicate the implementation of Buy (IDDM)/Buy(Indian)
Categorization? (Please rank, 1 being the most important) *
1 2 3 4

Reporting requirement of IC at all

stages by all Contractors, sub-
contractors.

Requirement of Certi cation of IC

by the CFO of the prime/main
contractor to accompany each
delivery

Withholding of payments and

imposition of Penalties for non
achievement of IC.

Long veri cation process by

MoD/DRDO for establishing IC
content.

12. What are the shortcomings in the Strategic Partnership Policy introduced by the Government in June 2017?
(Please rank, 1 being the most important) *
1 2 3 4 5

The policy is quite open

ended and does not
provide the detailed
guidelines for identi cation
of the Strategic Partner.

The policy is silent with

regard to the eligibility
criteria for selection of the
Strategic Partner.

Selection of only one player

per segment would create
a monopolistic situation in
the long run.

Lack of long term visibility

and the Strategic Partner is
not guaranteed of the
subsequent
orders/contracts.

The identi ed platforms

are quite large and would
deprive the small MSMEs
from participation.

13. What are the likely challenges the Strategic Partner likely to be encountered? (Please rank, 1 being the most
important) *
1 2 3 4 5 Column 6

Limited experience in
defence
manufacturing or nal
integration of complex
defence platforms by
private players.

Limited capability to
absorb/assimilate
technology.

Absence of a robust
ecosystem of tiers I, II,
and III partners.

Limited R&D base.

Lack of adequate
skilled manpower.

Low volume
discourages large
investments.
14. According to you which are the stringent requirement in the Strategic Partnership Policy? (Please rank, 1
being the most important) *
1 2 3 4 5

Restriction of only one

Strategic Partner per
segment

Promoters and directors of

the applicant Strategic
Partner and its group
companies must not be
wilful defaulters (as
classi ed by the RBI).

Cumbersome Technical
Evaluation Process

Stipulation of the OEM to

be jointly responsible along
with the SP for certi cation
and quality assurance of
the platforms supplied to
MOD.

No commitment to buy
future requirements from
the Strategic Partner.

15. According to you, whether the Strategic Partner once identi ed would nurture and develop Tire-I/Tire-II or
MSME Suppliers for developing an ecosystem for self reliance in the Defence Manufacturing. *

Strongly Agree

Agree

Cannot Say

Disagree

Strongly disagree

16. The Strategic Partnership Policy and Buy (IDDM) Categorization of the DPP-2016 would enable India to be
self reliant in the Area of Defence Manufacturing in Aviation Sector. *

Strongly Agree

Agree

Cannot Say

Disagree

Strongly disagree

17. According to you, what steps should be taken towards enhancing the participation of private Indian industry
in defence sector? (Please rank, 1 being the most important) *
1 2 3 4

Ease of granting defence

manufacturing licence.

Incentivising investment in
defence R&D by private industry.

Tax incentives for defence

industry as being provided by
many developed Countries.

Nomination of private sector for

speci c programs for which they
may have established the
capacity and capability.
18. India will be able to gain expertise in all core technological areas to achieve self-reliance in aircraft
production in the next 10-15 years through offsets and strategic partnerships. *

Strongly Agree

Agree

Cannot Say

Disagree

Strongly disagree

19. The Indian Defence Public Sector Undertakings have high skilled talent pool of Engineers, motivated
workforce and infrastructure to design/develop the military aircraft requirements of Armed forces *

Strongly Agree

Agree

Cannot Say

Disagree

Strongly disagree

20. Joint Ventures (JV) of foreign OEMs of Aircraft with Indian Private Industries would lead to better transfer of
technology assimilation as compared to JVs of foreign OEMs of Aircraft with Indian Defence Public Sector
Undertakings. *

Strongly Agree

Agree

Cannot Say

Disagree

Strongly disagree

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