PM Modi Sets Challenging Target For India's Defense Manufacturing Sector

By siliconindia | Wednesday, 18 February 2015, 10:40 Hrs

BANGALORE: Taking a strong pitch to end India's dependence on defense imports, Prime Minister Narendra Modi promised a conducive environment for manufacturers, including a discrimination-free tax system, and asked foreign firms not to be just "sellers" but "strategic partners".

Inaugurating the 10th 'Aero India' show here, the Prime Minister said while the country needs to increase its defense preparedness and modernize its forces due to security challenges that were well known, it should aim to manufacture 70 per cent of military hardware domestically in next five years and remove the tag of being number one importer of defense equipment. Stressing that developing domestic defense industry "is at the heart of the 'Make in India' programme", he said, "We will build an industry that will have room for everyone - public sector, private sector and foreign firms".

"From sellers, foreign firms must turn into strategic partners. We need their technology, skills, systems integration and manufacturing strength," he said. He said the foreign players can use India as part of their global supply chain and India's frugal but sophisticated manufacturing and engineering services sectors can help reduce costs. Also India can be a base for export to third countries, especially because of its growing defense partnerships in Asia and beyond, he said.

He said the government was reforming defense procurement policies and procedures. "There would be a clear preference for equipment manufactured in India. Our procurement procedures will ensure simplicity, accountability and speedy decision making," he said. Modi noted that his government has raised the permitted level of Foreign Direct Investment to 49 per cent and this can go higher, if the project brings state-of-the art technology.

"We have permitted investments up to 24 per cent by Foreign Institutional Investments. And, there is no longer a need to have a single Indian investor with at least a 51 per cent stake. Industrial licensing requirements have been eliminated for a number of items. Where it is needed, the process has been simplified," he said. "We have to equip ourselves for the needs of the future, where technology will play a major role. As a nation of one billion people, we also have huge requirements for managing internal security," he said.

Source: PTI