Restructuring Indian Defence Industry: Enhancing the Role of the Private Sector

Centre for Air Power Studies, Issue Brief No. 114/16, February 12, 2016

Prakash Panneerselvam, Post Doctoral Associate, National Institute of Advanced Studies, Bangalore

CAPSIndian defence manufacturing sector has come of age as the government has taken the decision to award major combat systems and upgradation programme of existing weapon platforms/ systems to the Indian industry under the “Make” category. The new policy outline on defence procurement has brought out a more dynamic approach to address the issue of self-reliance and indigenisation in the defence sector. The new induction in procurement policy such as increase in the offset contract threshold from Rs 300 crore to 2,000 crore, and new category – Indigenously Designed, Developed and Manufactured (IDDM), clearly marks a shift towards indigenisation. One can expect that the new Defence Production Procedure (DPP-2016) and offset policy will be significantly different from the previous versions and will attempt to facilitate a smoother transaction of procurement, that had become cumbersome over the years directly affecting the operational readiness of the Indian Armed Forces.

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