Foreign vendors bag 64% capital procurements contracts for Defence in last 3 years: Government in Parliament

Heavy dependence on imports continues: 93 contracts with foreign suppliers during 1st term of Modi Government; 18 with Israel

December 9, 2019 By Vishal Thapar Photo(s): By Ministry of Defence
FOREIGN DOMINATION OF INDIAN ARMS BAZAAR CONTINUES: Defence Minister Rajnath Singh with his French counterpart Florence Parly at the induction ceremony for the imported Rafale fighter jets in France on October 8

Over 64 per cent Defence contracts for capital acquisition of new military equipment in the last three financial years, by value, have been placed on foreign suppliers while Indian vendors lagged behind at 35.7 per cent, the Government stated in the Rajya Sabha on December 9.

The figures suggest heavy dependence on foreign suppliers of military equipment despite emphasis on self-reliance through Make in India programmes. The big import content even in orders placed with Indian Industry sharpens the skew.

"During last three financial years (2016-17 to 2018-19), 149 capital acquisition contracts have been concluded, out of which 58 contracts worth about 1,38,727.16 Crore and 91 contracts worth about 76,955.73 Crore have been placed on foreign vendors and Indian vendors respectively for procurement of defence equipment for the Indian Armed Forces," Minister of State for Defence Sripad Naik stated in a written response to a question in the upper house of Parliament.

"During last three financial years (2016-17 to 2018-19), 149 capital acquisition contracts have been concluded, out of which 58 contracts worth about 1,38,727.16 Crore and 91 contracts worth about 76,955.73 Crore have been placed on foreign vendors and Indian vendors respectively for procurement of defence equipment for the Indian Armed Forces," Minister of State for Defence Sripad Naik stated

In reply to another question, Minister Naik declared that 93 contracts have been signed with foreign suppliers during the last five financial years (2014-15 to 2018-19), a time period which corresponds to the first term of the Narendra Modi Government.

"93 contracts have been placed on foreign vendors out of which 18 contracts have been signed with Israel for capital procurement of defence equipment for the Indian Armed Forces," Naik stated, not disclosing the value of these 93 contracts.

But he put a figure of 1,49,259.07 Crore to 164 contracts placed with Indian vendors during the same five-year period (2014-15 to 2018-19).

Last week, to contest the impression that the Make in India programme for Defence production was a non-starter, the Ministry of Defence issued a statement that 180 orders and contracts worth 1,96,000 Crore had been awarded to Indian Industry since 2014. Correlation of the two sets of figures suggests that contracts and orders worth 46,740.93 Crore have been placed with Indian Industry in the current financial year (2019-20).

In his reply tabled in the Rajya Sabha on December 9, Minister of State Naik enumerated measures by the Modi Government to promote indigenisation in Defence procurements.

Last week, to contest the impression that the Make in India programme for Defence production was a non-starter, the Ministry of Defence issued a statement that 180 orders and contracts worth 1,96,000 Crore had been awarded to Indian Industry since 2014

"Defence Procurement Procedure (DPP) accords the highest priority to Buy Indian (Indigenously Designed, Developed and Manufactured) (IDDM). The ‘Make’ procedure has been simplified with provision for earmarking projects not exceeding development cost of 10 crores (Government funded) and 3 crores (Industry funded) for Micro, Small and Medium Enterprises (MSMEs); and with provisions for involving private industry as production agencies and technology transfer partners.

"Government has also promulgated the policy on Strategic Partnership in the Defence Sector to encourage broader participation of the private sector in manufacture of major defence platforms and equipment," he stated.