Page 27 - ADT JANUARY 2021 Online Magazine

cate greater budgets to meet urgent defence
modernisation needs. In-country sourcing is
now being looked at wherever possible to meet
defence needs and provides much needed
support to Indian defence industry, which has [ REPORT ]
been badly impacted because of the COVID-
19 pandemic. The immediate impact of Indian
measures to increase in-country sourcing of
defence equipment has been felt by foreign
Original Equipment Manufacturers (OEM), who
are seeing a marked reduction in the Indian
willingness to import defence equipment from
abroad.

With the focus on in-country production,
contract signature with Airbus for license pro-
duction of the C-295W military transport India
is keenly awaited and expected this year. The
Ministry of Defence (MoD) recently announced
that the deal was at the CFA approval stage and
a contract was likely to be signed in the near
future. Airbus has partnered with Tata Group
as its Indian Production Agency (IPA) and the
56 aircraft contract will result in the first 16 air-
craft delivered as ‘Fly Aways’ by Airbus and the
remaining 40 to be built under license in India.

Supporting Industry
The latest iteration of India’s military procure-
ment policy, the Defence Acquisition Procedure
(DAP) – 2020 places a renewed impetus on
enhancing the nation’s defence manufactur-
ing base. DAP 2020 which was unveiled in
September 2020, aims to unleash the poten-
tial of the Indian defence industrial ecosystem,
Fortress which has long been shackled with restrictive
regulations and support for state-owned firms
at the expense of the private sector. To encour-
age infusion of funds into the defence industry,
the Foreign Direct Investment (FDI) limit in
India defence manufacturing under the automatic
route has now been raised from 49 percent to
74 percent. Offset provisions now only apply
on Capital Acquisitions worth Rs20 billion or
above. The quantum of offset has been set at
30 percent of the estimated acquisition cost.
Offset obligations are to be discharged via an
INDIA LOOKS TO INCREASE IN-COUNTRY Indian Offset Partner (IOP), which could com-
PRODUCTION AS CONFIDENCE GROWS IN THE prise of companies from the private sector,
Defence Public Sector Units (DPSU), Defence
COUNTRY'S DEFENCE INDUSTRY Research & Production Organisation (DRDO)
and Ordnance Factory Board (OFB). Foreign
vendors, however, would be free to select their
Atul Chandra IOP.

As per Government estimates more than 1800
The Indian Government is proceeding with its plans of ‘Atmanirbhar Micro, Small & Medium Enterprises (MSME)
Bharat’ (Self Reliant India) to hasten the growth of the country’s make up the industry base for the DRDO, in
domestic aerospace and defence industry even as it looks to allo- addition to support DPSUs and the OFB. The

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