10 June 2017

News Story: India to directly scout foreign partners for big-ticket programs

By: Vivek Raghuvanshi

NEW DELHI — India's long-awaited strategic partners policy has been approved, paving the way for the selection of private sector companies to produce weapons in partnership with overseas original equipment manufacturers.

Under the SP policy, four weapon programs, estimated to be worth more than $30 billion, have been identified. The programs involve submarines, helicopters, single-engine aircraft and armored vehicles/main battle tanks.

Under the policy, foreign OEMs will be selected directly by the Ministry of Defence and not the strategic partner from the private sector, as was initially discussed. The ownership of the joint venture along with the OEM has been vested with the Indian entity by capping the foreign direct investment, or FDI, to 49 percent. 

Analysts say the issue relating to the ownership of intellectual property rights and defense technology transfer are no easy issues, as OEMs may be reluctant to set up a joint venture without a controlling stake. 

"Many details will have to be worked out in the process of bidding and contracting. For instance, issues relating to patents and IPRs will have to be resolved. This is easier said than done," said Vivek Rae, a former director general of acquisition for the MoD. "Holding OEMs responsible for product quality and performance could also be problematic. There will be many difficult obstacles to be crossed before any contracts materialize.

"The policy is unlikely to satisfy OEMs who may be looking for majority stake before transferring sensitive technology." 

Read the full story at DefenseNews


PacificSentinel: Yet again India makes a stupid decision in the Defence Industry/Military Modernization field...

Story Quote: "Holding OEMs responsible for product quality and performance could also be problematic"

...That didn't work out so well with Dassault & the Rafale Fighter buy, did it India, foreign Defence Companies aren't going to take responsibility for an Indian companies failure to follow instruction. Keep dreaming India!