Private sector can play an important role in Make in India but does our policy provide it level playing field? Discuss in context with Defence Sector
Published: February 19, 2018
As India plans to emerge as the superpower it has to cut down the dependence on Imports for defence sector. Private sector has to be a key partner in enshrining the indigenisation of defence production. Though there have been efforts like liberalisation of defence sector, offset policies and FDI to boost the private sector participation in defence production, their low capability when compared to foreign players and Public sector companies, they are at unequal footing. This capacity augmentation is a requisite for the greater role of private players in defence sector.
The steps required for augmenting the capacity of private sector under Make in India- defence are
- Trust Building : There is need to acknowledge at every level of government that the private sector in India can be trusted to play as important a role in the modernisation of India’s defence capabilities as the public sector.
- Long term contracts: Ministry of Defence is the sole customer for the defence industry in the country. Without long-term contracts, certainty of volumes, a quick selection process, transparency and fair payment terms, there will be little incentive for private players to invest the huge resources required for defence production.
- Road map for engagement: The government must evolve clear road map for engagement, with clearly identified thrust areas so that there would be certainty to boost the confidence of the Industry.
- Sovereign defence fund: A PPP model with 49% government funding and remaining from the Industry with no player contributing more than 5 per cent. This will aid in long-gestation research and development projects and facilitate strategic global acquisitions in key technology areas of defence and national security. This will provide big support for the Micro, Small and Medium Enterprises (MSMEs).
- Infrastructure status for the defence sector paving the way for easier credit and a greater role and opportunity for the private sector.
These corrective measures can aid India in achieving a greater role for private sector in defence production.
Model Questions Category: 081 - Indigenization of Technology and Developing New Technology