The defence industry has suggested that outgoing funds planned for foreign companies that have ongoing contracts should be redirected to Indian entities to keep them a going concern and have flagged off concerns that the prolonged lockdown will have dire consequences as exports have come to a complete halt.
In a detailed exit strategy post the lockdown, the industry has suggested to the ministry of defence that outsourcing of work from public sector units is urgently required and that the defence sector be placed under the essential services category to avoid a meltdown of the ecosystem.
Faced with the pressure of retaining its highly skilled workforce and anticipating a cut in government spending, the industry has suggested that as an immediate measure, funds earmarked for payments to companies in the US, Russia, Israel and the European Union be redirected to companies domestically.
“Most (foreign) companies who have on-going contracts with Indian MOD have also been in lock-down mode since mid February or early March. They may remain so till end June or beyond. Therefore, it is anticipated that outgo of funds meant for contracts of foreign OEMs would not take place as planned,” said a note sent by Society of Indian Defence Manufacturers to the ministry.
A bulk of India’s capital acquisition budget still goes overseas due to the import dependency. This includes major cost intensive platforms like fighter jets, transport aircraft, helicopters and missiles, besides ammunition.