In a major step for defence indigenisation, the Union Cabinet today gave its go ahead to the ‘Strategic Partnership’ (SP) model under which select private firms will be engaged to build military platforms like fighter jets, submarines and battle tanks.
The new policy is expected to attack billions of dollars of investment in defence manufacturing by private defence majors including leading foreign firms.
After the cabinet meeting, Defence Minister Arun Jaitley said the government wants to implement at the earliest the new model which is aimed at production of major defence platforms and equipment by Indian companies in collaboration with leading foreign firms.
Jaitley said the strategic partnership model is part of the Defence Procurement Policy (DPP) and the cabinet was apprised about it considering its importance.
"The cabinet took note of the decision of the Defence Ministry. As it is an important issue, the cabinet took note of it," Jaitley told reporters.
The new policy was also discussed at a meeting of the Cabinet Committee on Security today. The Defence Ministry had approved the much-awaited policy on Saturday.
"We would like to start it as fast as we can," Jaitley said in reply to a question on when the new model will be implemented.
He said four segments -- submarines, fighter aircraft, helicopters and armoured carriers/main battle tanks -- were identified under the new policy.
One Indian private defence manufacturer will be selected for each of the four segments and the Indian entity will tie-up with the select foreign Original Equipment Manufacturers (OEM) to produce platforms under the 'Make in India' initiative.
Jaitley said the strategic partner for each category will be selected through a bidding process.
The Defence Minister said that the private sector and state-run defence PSUs can co-exist and that government is going to increase its spending in defence procurement from domestic industries.
"Defence preparedness itself necessitates that you procure domestically and manufacture domestically. These are sectors in which I anticipate government spending to increase in years to come," he said.
The private sector has been pushing for the SP model and even a number of foreign defence majors were looking forward to it.
"With all the effort that has gone into finalising the policy, it can potentially be a turning point in India's endeavour to have a robust homegrown private defence industrial base. We hope the segments that have been identified under the strategic partnership model will provide the much needed spark to kick-start the 'Make in India' initiative, which we espouse wholeheartedly," said Pierre de Bausset, President and Managing Director, Airbus in India.
The SP model was proposed by the Dhirendra Singh Committee in July, 2015. It had said that for the 'Make in India' initiative to become wider in the defence sector, the government should adopt a strategic partnership model, whereby a private firm is chosen for the development of a specific identified platform.
Last year, the then defence minister Manohar Parrikar had announced that the policy on SP model would be unveiled soon.
