Aero India a launch pad for domestic defence manufacturing sector: PM

Jayarama Emani | The Dollar Business The 10^th edition of Aero India kicked-off in Bangalore today with Narendra Modi, Prime Minister of India, formally inaugurating it. Speaking at the event which had participation from 250 Indian companies and more than 300 international firms, Modi said, “For me this is not just a trade fair for defence equipment, but a platform to launch India’s defence manufacturing sector.” Stressing the need for a strong defence industry, Modi said that investments in defence can boost investment, expand manufacturing, support enterprise, raise the technology level and increase economic growth in the country. Turning his focus on his pet project, ‘Make in India’, the PM said that India’s defence industry in private sector though small, employs thousands of people and nearly imports 60% of the defence equipment spending billions of dollars on acquisitions from abroad. “India is reforming its defence procurement policies and procedures,” he said and added, “There would be clear preference for equipment manufacture in India. We have raised the permitted level of Foreign Direct Investment to 49% and this can go higher if the project brings state-of-the-art technology. We have permitted investments up to 24% by Foreign Institutional Investments and there is no longer need to have a single Indian investor with at least a 51% stake.” Announcing that India is launching a Technology Development Fund as also introducing a scheme to provide up to 80% of funding from the Government for development of a prototype in India, Modi said that the new fund will help India expand its exports, but it will ensure that the equipment and technology do not fall into the wrong hands. Saying that the present tax system must not discriminate domestic manufacture in comparison to imports, Modi felt that the defence industry will succeed more if it can transform the manufacture sector. Calling the international firms to become strategic partners and not just sellers to India’s defence industry, Modi said that the country needs the foreign companies’ technology, skills, systems integration and manufacturing strength. In turn, the global players can use India as part of their supply chain worldwide. “India’s frugal but sophisticated manufacturing and engineering services sectors can help reduce costs and it can also be a base for export to third world countries, especially because of India’s growing defence partnerships in Asia and beyond,” he said and added, “A strong Indian defence industry will not only make India more secure but will also make it more prosperous.”  

 This article was published on February 18, 2015.