Govt brings in pvt sector in defence production

If the early signs of a regime give a measure of its thinking, then Narendra Modi’s defence ministry has clearly laid down a path for the country to become a ‘muscle-bound’ military-industrial complex (MIC) out of its first defence acquisition council (DAC) meeting on Saturday, 19 July. The DAC met after a gap of six months.

But the concept of MIC was of the first post-WW II American president, Dwight Eisenhower, who coined to negatively throw light on the huge interest group that grew out of the US domestic arms merchants, who almost made the defence policy of the country.

In decisions to place orders for acquiring weapons, platforms and equipments worth Rs 40,260 crores, the DAC chaired by Arun Jaitley, the minister-in-charge put a lot of faith in the domestic companies, including the home-based private sector companies.

The first significant sign of that was in placing the five ‘fleet support vessels’ in the ‘buy Indian’ category. They together will be worth Rs 9,000 crores, and will be open for bidding by any Indian shipyard – private and public.

The second sign of the changing times – considering that AK Antony did talk of domesticising defence production but never could go whole hog – was to place a massive acquisition plan to replace the aging Avro turbo-prop aircrafts, worth Rs 21,000 crores.

The way the project was originally conceived was to have significant private sector participation in kick-starting a domestic aerospace industry by ordering for 56 aircrafts. The main plan was for opening up the bid to foreign manufacturers who would identify an Indian partner which could be the government-owned Hindustan Aeronautics Ltd (HAL) but ‘not limited to HAL,’ thus allowing entry for the domestic private sector.’

The first 16 of the Avro replacements were to be bought in fly-away condition from the foreign vendor, but next 40 were to be built within the country by the domestic partner. The remaining project cost of Rs 21,000 crores was to be the basis, on which the domestic aerospace sector is to be built.

In a vote of confidence on the public sector behemoth, HAL, the DAC has also decided to procure another 32 Advanced Light Helicopters (ALH) for the Coast Guards and the navy, worth Rs 7,000 crores.

The other decisions taken were to procure search-and-rescue gear of Rs 900 crores; five Fast Patrol Vessels for the Coast Guard worth Rs 360 crores and Offshore Patrol Vessels worth Rs 2,000 crores.

At the end the defence minister Jaitley told the meeting, ‘We have cleared quite a few projects today. But many other projects are in the pipeline. We need to expedite them.’