Atmanirbhar Defence Dilemma: What Exactly Is an ‘Indian’ Firm?

As the government readies the Defence Acquisition Procedure (DAP), it faces a tricky question: how do you define an Indian manufacturer? Important at any time, it is especially so now, in the Atmanirbharata

(self-reliance) era. What is an Indian firm? Currently, the government allows 49 per cent foreign investment in the defence sector. In some cases, it can be as high as 74 percent as well. So, if a foreign firm sets up an Indian subsidiary with 74 per cent foreign direct investment, is it an Indian firm? "Can they be given an IDDM (Indigenously Designed, Developed, and Manufactured) order? In recent years (this is the Atmanirbharata era), imports are declining sharply, and orders to Indian firms are growing. Here is a firm that is "Indian," even headquartered in India, but is it Indian if over half its investment has come from abroad? And its products-- were they designed in India? What about the patent? This is the question before the planners. And how would it affect the "homegrown" firms? Would these homegrown firms that have started from scratch and built themselves, "brick by brick," as they say, over the years, find it acceptable? Would the decision hurt them? The defence ministry has not made a decision, but the DAP is likely to be ready in a couple of months. Then, it will be shared with a wider audience, including the armed forces, the government-owned defence manufacturing firms, the Defence Research and Development Organisation (DRDO), and the industry. All points of view will be considered, and changes may be made, if necessary. Quite naturally, both sides will speak to the government. The government has made several other important decisions. They include:* The "strategic partnership" issue. So far, it has not succeeded, but even if it hasn't, is it the right time to discard it? Would that "look good?" So, even if very little has been done, and there have been very few cases, it is likely to remain, keeping in mind the "optics," a senior official said. * There is a decision to reduce the number of "categories" relating to purchase. For instance, categories like Buy and Make (India) and Buy Indian can be "combined," an official added. The Buy and Make (Indian) is about buying weapons that are already ready from an Indian firm linked to a foreign manufacturer. This can be followed by manufacturing in India and the transfer of technology. The defence ministry's annual capital budget is huge-- about Rs 180,000 crore and growing. Considering the security considerations, the recent problems leading to Operation Sindoor, beginning with the bombing of terror camps in Pakistan and Pakistan-occupied Kashmir, is evidence of a need for additional funds. And this DAP will be in place for at least a decade. Which is why a decision on what exactly is an "Indian firm" becomes critically important.