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Indian Cabinet Approves Strategic Partnerships Policy

Fighter Aircraft, Helicopters, Armoured Vehicles and Submarines Will be First

On 24 May, after more than a year of argument and haggling over details which have delayed procurement of tens of billions of dollars of defence equipment, the Indian cabinet’s Committee on Security approved the so-called ‘Strategic partnership’ model for procurement of major defence items.

The government will now proceed to shortlist then pick one Indian company to join with one foreign partner in each of four strategic sectors: fighter aircraft, helicopters, armoured vehicles and submarines. Prime Minister Narendra Modi is committed to a policy that will end India’s role as the world’s largest arms importer and will instead boost the capability of Indian companies in specific sectors by linking them to foreign partners.

For each platform, one private sector strategic partner will be chosen,” Defence Minister Arun Jaitley explained to the media after the decision was announced. He went on to explain that a principal element of the policy design is to encourage manufacturing by assuring the selected companies of future orders. “You don’t set up a manufacturing facility if you don’t have any hope of getting orders,” he commented.

Adani Group, Larsen & Toubro, Mahindra Group, Reliance Group, and Tata Group have all been positioning themselves for success in what is certain to be a fierce competition for selection. As far as foreign partners are concerned, Airbus, BAE Systems, Boeing, Lockheed Martin, and Saab have all made recent proposals or suggestions that would support a bid for serious consideration.

In the next few weeks Modi will be visiting Germany, Spain, Russia and the United States: defence will be high on the discussion agenda in all four capitals.

Tim Mahon


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