After a long wait, the Ministry of Defence (MoD) has finally granted its nod to the draft ‘Strategic Partnership’ (SP) policy even it was forwarded to the Cabinet Committee on Security (CCS) for its final approval.

“The draft proposal has been finalised today. Within a month the policy will be rolled out as part the 2016 Defence Procurement Procedure, once the CCS approves it,” a top MoD official told BusinessLine who refused to be named.

Post some final touch-up by the Finance Ministry, Prime Minister Narendra Modi-headed CCS is expected to put its stamp on the policy in around one month, sources said.

The “broad contours” of the policy was finalised at a meeting of the Defence Acquisition Council (DAC) held here on Saturday, under the chairmanship of Finance and Defence Minister Arun Jaitley, stated a release issued by the MoD.

Once approved by the CCS, it will form Chapter VII of the DPP, which was released in March last year by former Defence Minister and Chief Minister of Goa Manohar Parrikar.

High-end defence equipments

Objective of the SP policy is to boost manufacturing of armaments by the private sector companies, which will be enlisted into separate categories to manufacture a particular defence platform in partnership with foreign OEMs to make high-end defence equipments.

In the initial phase, the policy will be implemented in selected segments – fighter aircraft (including helicopters), submarine and armoured vehicle. More segments will be added as the policy matures, the MoD release said.

“The policy, which was developed through extensive stakeholder consultations with Indian industry, envisages the establishment of long-term strategic partnerships with qualified Indian industry majors through a transparent and competitive process wherein the Indian industry partners would tie up with global OEMs to seek technology transfers and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains,” it stated.

SP policy

The DAC had last met on May 15 to discuss the SP policy. Prior to that, on May 11 Jaitley held his first meeting with the industry since becoming the Defence Minister on this matter. And by Saturday the policy was finalised.

Industry sources said that the government has not consulted them since then on the reservations out forward by them and has swiftly finalised the policy.

Once approved, defence programmes worth Rs.200,00 crore are expected gain momentum, including naval utility helicopters (NUH) for Rs. 20,000 crore, the P-75 Scorpene submarine programme worth Rs. 60,000 crore, the single- or twin-engine fighter-jet deal worth about Rs. 1,00,000 crore and some other projects.

As far as foreign direct investment (FDI) in defence is concerned, the MoD is likely to allow 49 per cent foreign direct investment (FDI) and that there will be no “pyramiding of FDI” in the Indian holding companies by foreign partners, so that the key decision-making rests in the hands of the Indian firm.

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