Foreign firms’ share in defence purchases to be cut to 30% in 2 years

Government plans to reduce contracts with foreign defence equipment vendors to 30 per cent of the total procurement over the next two years, Defence Minister Manohar Parrikar said on Friday. He told the Lok Sabha that this reduction would bring down India's dependence on dollar and imported material.

"Foreign vendors' contracts have been declining from 52.47 per cent in the year 2013-14 to 38.11 per cent in the year 2014-15. We intend to bring this down in the next two years to 30 per cent," Parrikar said during Question Hour. In 2014-15, the expenditure on defence capital acquisition stood at Rs 65,682.34 crore and out of the total amount 38.11 per cent pertained to orders placed with foreign vendors. Meanwhile, he said the government has worked out a new arrangement with the US whereby the overall fund position in the foreign military sales is taken into consideration.

For the last ten years, Parrikar said money was being paid under foreign military sales for 32 contracts with the US government and even if there was a slippage, money was getting accumulated with the US Treasury Department.

The money belongs to the Indian government but is lying with the US Treasury and over the next two years, Parrikar said, "we are not going to pay a single rupee in terms of dollar to the US government because the balance is $1.7 billion".

With regard to defence shipyards, the Minister said the they have orders worth Rs 1.5 lakh crore to be supplied over the next 10-12 years.