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Kovid Kumar asked: Why should not we encourage to our private sector to defence production rather than we enhancing our dependence on foreign industries?

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  • Laxman Kumar Behera replies: The government has in fact taken several measures to bring in the private sector and encourage them in defence production. In 2001, the government liberalised the defence industry, by allowing up to100 per cent participation by private companies in defence production and also allowed foreign direct investment up to 26 per cent. In DPP-2006, the Ministry of Defence introduced an offset policy to leverage India’s huge arms imports towards strengthening domestic industrial capability. In addition, the government has tried to revise its procurement procedures to create more space for the domestic companies to participate in defence production. The ‘Make’ category and the recently announced ‘Buy and Make (Indian)’ provide significant scope for domestic industry, including the private sector, in assuming the role of big system integrator.

    Although the government has so far tried its best to involve the private sector in defence industry, there are still few areas of concern that limit its greater involvement in defence production. These concerns are mainly in the form of government’s ‘favouritism’ towards its own enterprises, limited scope for attracting foreign technology, and government reluctance in announcing Raksha Udyog Ratnas (RURs). These concerns need to be addressed so as to create a vibrant defence industry in India, which could lead to higher self-reliance in defence production.