In a big vote of confidence for the increased involvement of the private sector, Prime Minister Narendra Modi has said that it will be impossible to create a modern defence ecosystem without its cooperation, making a case for domestic industry to invest more in research and development of weapon systems.
Urging the private sector to look at opportunities for manufacturing and export of defence equipment, the PM said that a number of reforms carried out by the government are focused on making India a prime producer of arms. Addressing an industry gathering, the PM said that he appreciates that there is a hesitation by the private sector in entering the heavily regulated defence sector but assured that there is full support for their involvement, particularly by the uniformed services.
“Without the cooperation of the private sector, the 21st century defence ecosystem cannot stand. I know this and now the various organs of the government are also aware of it,” the PM said, listing out reforms carried out in the past six years that include de-regulation, de-licensing, export promotion and liberalisation of foreign direct investment (FDI) rules. The PM urged the deeper involvement of the private sector in development of weapon systems.
“We are working ahead and focusing on transparency, predictability and ease of doing business… I would urge the private sector to come forward with not just manufacturing capabilities but also with design and development,” the PM said in an address to a defence ministry seminar on the budget hosted by the Society of Indian Defence Manufacturers.
Defence minister Rajnath Singh announced at the seminar that in the new budget, 63% of the capital allocation has been reserved for procurement from domestic sources. He later added that at least 15% of this would be from the private sector.
“My ministry has planned to invest about 63% of the outlay for 2021-22 on domestic procurement, that is about Rs 70,221 crore for domestic defence procurement,” the minister said, adding that this would have a multiplier effect for the industry including startups and MSMEs and would generate new employment.