Defence Procurement Policies Are Designed to Encourage Co-Development and Co-Production with International Manufacturers: Antony
(Source: Press Information Bureau India; issued May 27, 2008)
The Defence Minister Shri AK Antony declared last night that the defence procurement policies are designed not only to further develop the country’s capabilities in production of land, air and naval defence equipment but also to encourage co-development and co-production with international manufacturers. Shri Antony was speaking at a reception hosted by the Ministry of Defence on the eve of the Berlin Air Show-2008 which was attended by the German Defence Minister Dr Franz Josef Jung and captains of defence industries of a number of European companies.

Following is the text of Shri Antony’s speech at the reception.

“It gives me great pleasure to welcome Mr. Franz Josef Jung to our function on the eve of the prestigious Berlin Air Show. We have met for the second time within a year, and we continued with our very productive discussions earlier this evening.

I will have the honour tomorrow to jointly inaugurate the India Pavilion with Chancellor Merkel at the Berlin Air Show, in which India has been invited to be the Partner Country. I am looking forward to this event, which represents an important step forward in the growing strategic partnership between our two countries. Our cooperation is extensive and growing and embraces an entire range of political, economic, scientific, cultural and defence spheres based on our shared commitment to democracy and fundamental freedoms.

India, today, is in the midst of a significant transformation and its economy is becoming increasingly globalised. Sustained economic reforms and liberalization have yielded a one trillion dollar economy with GDP growth of 8 to 9% per year in recent years which we hope to sustain in future. This is essential if we are to achieve the goal of lifting our people out of poverty and improving their standards of living.

The transformation of a plural democracy of over one billion people will not only dramatically alter India’s economic prospects but will also have a far reaching impact on the global economy. India is already emerging as one of the important engines of growth for both the Asian and regional economy and this trend will strengthen further in the years to come. India has a productive demographic profile; it has a large and growing pool of skilled and highly qualified manpower. In a global economy where knowledge and technology are increasingly becoming the key drivers of growth, India is well positioned to emerge as a major economy in the coming years.

At the political and security level, there is growing recognition of India’s key role as a responsible power and a factor of stability in a region faced with security challenges emanating from different sources. Indeed we believe India’s continued economic growth will provide new opportunities for its neighbours to tap into and benefit from this economic dynamism. At the same time, India’s open democracy exerts a stabilizing and moderating influence.

The aerospace industry in India is witnessing unprecedented growth. Our aviation industry is 60 years old and now has the technological and manufacturing capability to execute complex projects involving cutting edge technologies. Hindustan Aeronautics Limited, our premier aerospace company has grown into an integrated aerospace organization, which also manufactures different types of aircraft with in-house R&D. Recent projects include Dhruv, an Advanced Light Helicopter, Sitara, an Intermediate Jet Trainer, and Tejas, a Light Combat Aircraft which is under development. Other organizations, such as the Defence Research and Development Organisation are involved in cutting edge research and development.

The civil aviation sector in India has been growing at a phenomenal pace recording an annual growth of around 25% in passenger traffic. Indian companies have placed record orders for planes with major global manufacturers to meet this growing demand. At the same time, there is a renewed thrust on modernization of aviation infrastructure, including airports, communications, navigation and surveillance systems for air traffic management to keep pace with this fast expanding traffic.

In space technologies we are at the frontiers, having the capability to manufacture sophisticated satellites and space launch vehicles. Our civilian space programme is a key element in expanding communications, resource management, disaster warning and in bringing better education and health facilities to our remote and rural areas through distance education and telemedicine. India is providing satellite data and space launch services to several international partners. We are now getting ready to launch our Moon Mission, named Chandrayan, which will also carry several international experiments, including from the EU.

While the Indian defence industry, which has been largely in the state sector, has developed broad-based capabilities, we have recently put in place policies and initiatives to encourage private sector participation. The defence industry sector in India is now open up to 100% for Indian private sector participation, while foreign direct investment is permissible upto 26%. Procurement policies have been streamlined and transparent procurement policies have been put in place including the requirement of an offset of 30% for certain contracts. These policies are designed not only to further develop our capabilities in production of land, air and naval defence equipment, but also to encourage co-development and co-production with international manufacturers.

The Defence Offset Facilitation Agency set up in September last year to act as a bridge between the Indian defence industry and potential vendors, both foreign and Indian, also helps private industry to obtain industrial licenses for the manufacture of defence products. Encouraged by these policies, our companies are entering into high-tech partnerships with defence majors located abroad to bid for advanced systems and projects in India. At the same time there is keen interest to engage India as a partner in design, production and development of advanced weapon systems.

There is, therefore, enormous potential as we seek to encourage active indigenisation in defence production as well as greater investment in research and development.

We have put in place an institutional and practical foundation for bilateral cooperation with Germany in the field of defence, with the signing of the Defence Cooperation Agreement in 2006 and the Agreement on Mutual Protection of Classified Information in 2007. Two rounds of meetings of the High Defence Committee and their Sub-groups have been held and now with our participation as Partner Country at the Berlin Air Show, the time is ripe to identify and implement concrete areas of cooperation. We are glad to note that leading firms and organisations from Germany, with their proven advantage in cutting edge technologies - are taking advantage of the opportunities opening up in India to forge new and innovative partnerships to locate some production and manufacturing in India. The Berlin Air Show provides another platform for forging business alliances and I hope that both sides will take advantage of this opportunity.

I would like to thank Defence Minister Jung and all our distinguished guests for being here with us today. I wish the Berlin Air Show and Indo-German cooperation all success.


prev next

Breaking News from AFP See all

Press releases See all

Official reports See all