Parrikar allays fears of firms on strategic partnership move

Parrikar allays fears of firms on strategic partnership move

Parrikar allays fears of firms on strategic partnership move

Defence Minister Manohar Parrikar has sought to ally fears expressed by domestic and foreign defence firms that only big companies might get benefit from the proposed strategic parnership move of the government in critical segments like submarines, aircraft and missiles.

Former DRDO chief V K Aatre is scheduled to submit this week a key report to the Defence Ministry recommending guidelines for selecting domestic private firms for strategic partnership.

The feeling among the private industry players is that only the big firms will benefit out of this. However, even the large firms are not open to the idea since they feel that they would be restricted to just specific fields and, therefore, their overall investment and plans will get affected.

However, Parrikar has said that the ministry will ensure that all projects are not cornered by strategic partners. Once the Aatre committee submits its report, the ministry will go in for a detailed review and see which points have to accepted and which kept aside, he said yesterday.

He also said that the government will provide a level- playing field and that the medium and small-scale firms will not be left high and dry.

An official of a defence firm, who did not want to be identified, said, "It creates the ground for nomination of a private sector business partner for award of defence contracts on an exclusive basis in each of the major categories in defence production."
Aatre report will deal with strategic partnerships in sectors related to aircraft, helicopters, submarines, armoured vehicles in Group 1 and ammunition in Group 2.

"The Aatre process could enable the big five of the Indian private sector defence industry to corner about 80 per cent of the business and create monopolies in all categories," industry sources said, adding that it may herald a return of "crony capitalism".

Also, "restricting one group to one platform is unprecedented. Globally, every large defence firm has a land, air and naval segment," a defence company official said.
Even the foreign firms are skeptical. "How can the government decide who our private sector partner will be? We will wait for a final decision before commenting," company sources said.

The draft DPP 2015 report, submitted by the Dhirendra Singh committee, had recommended that for 'Make in India' initiative to become wider in the defence sector, the government should adopt a strategic partnership model, whereby a private firm is chosen for the development of a specific identified platform.