New Delhi: There is tremendous potential for defense cooperation between India and Italy and the opportunities have grown manifold with the reforms introduced in this country’s offsets policy, Minister of State for Defense Mallipudi Mangapati Pallam Raju said Tuesday.
“There is tremendous potential for enhancing the defense industry cooperation between the two sides, particularly in the context of defense offset policy, the scope of which has recently been increased to include civil aviation and internal security, and training within the ambit of defense products and services,” Raju said at a roundtable on ‘Indo-Italian Defense Cooperation: Opportunities for Partnership and Co-Development’.
The revised offsets policy, Raju said, will give foreign original equipment manufacturers a wider range of opportunities for meeting their offset obligations.
Under its Defense Procurement Procedure (DPP), India has mandated that a foreign firm bagging an order worth over INR 300 crore will plow 30 percent back in the country. However, in the case of what is termed the mother of all deals — the USD 10.2 billion order for 126 combat aircraft — the offsets have been pegged at 50 percent.
The DPP, he said, is also being subjected to periodic review by the government.
“The recent introduction of ‘Buy and Make (Indian)’ category in the defense acquisition process has been designed to enhance participation by the Indian industry for meeting our requirements for state-of-the-art defense systems and platforms by getting into tie-ups with technology providers through mechanism of technology transfer and joint ventures,” he said.
Since the introduction of the offset clause in the DPP, offset contracts worth nearly INR 15,000 crore (nearly USD 3.3 billion) have been concluded so far.
“The total value of the offset contracts which are in the pipeline is estimated to be over INR 41,000 crore (nearly USD 10 billion)”, he added.
Raju also noted that “many Indian defense industries both in the public and private sector have business interactions and cooperation with various Italian defense companies under the Finmeccanica and Fincantieri groups.
Pointing to the huge opportunities available for defense industrial collaboration with India, Raju invited both domestic and foreign companies to forge new alliances and partnerships in the form of joint ventures for co-development and co-production.
The minister said that the government had also laid stress on building on a strong indigenous industry base.
“Recently, we have announced a Defense Production Policy which lays greater emphasis on self-reliance in defense. The policy seeks to build up a strong indigenous industry base by pro-actively encouraging larger involvement of the Indian private sector,” Raju said.
The policy also seeks to create an ecosystem conducive for private industry, particularly small and medium enterprises to play an active role in this expansion, he added.
Italian Minister for Economic Development Paolo Romani and the Italian Ambassador to India Giacomo Sanfelice di Monteforte also addressed the roundtable.
The two countries have signed an memorandum of understanding on defense cooperation in November 1994, which was renewed in 2003.
The eighth meeting of the India-Italy Joint Defense Committee was held in New Delhi in January last year.