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JULY 2014 ISSUE

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Winds of Change
Ensuring that delayed crucial aviation projects are delivered fast should be the new government’s priority
 


Winds of Change

Hope is riding high on the new Narendra Modi government. Little over a month after assuming the high office, India’s Prime Minister has managed to boost the confidence of the Indian military forces. While symbolic gestures like spending a day aboard INS Vikramaditya helped to bring in motivation to the Indian Navy, which was plagued by series of accidents in the last few months; it is his policy decisions like opening up the defence industry to the private sector that has attracted foreign investors’ confidence.

Although not formally announced, the Foreign Direct Investment (FDI) cap in the defence sector is planned to go up from the current 26 per cent. India’s commerce ministry had circulated an inter-ministerial note for feedback on increasing FDI in defence sector up to 100 per cent in progressive steps. This will not only strengthen the indigenous defence industry, but also increase the pace of modernisation that is the need of the hour for defence forces.

Furthermore, the government has taken steps to clear the confusions that often arise during defence production processes. On June 26, the Department of Industrial Policy & Promotion (DIPP), which functions under the ministry of commerce and industry, published a list of equipment that would require compulsory production licences. The list includes: tanks and other armoured fighting vehicles; defence aircraft, space craft; warships; arms and ammunition. The list also includes certain parts and accessories for these equipment. The items that are not included in the list would not require industrial license for defence purposes. This certainly had cleared the confusion on dual use equipment.

Arun Jaitley, the interim defence minister, also promised that more emphasis will be given to defence procurement during this government’s tenure. Jaitley, who is also holding the finance ministry portfolio, is in a position to allocate more funds to the latest defence acquisitions. During an interaction with the media recently, Jaitley said, “The key matter of concern appears to be the slow pace of acquisitions of whatever equipment and assets are required”. Adding that his government will take efforts to expedite defence acquisitions, he said, “Significant amount (of funds) has to be available for the nation’s defence”.

 
 
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