Fifth-gen fighter jet AMCA programme heralds new era in defence industry, but defence secretary has a condition
Defence Secretary Rajesh Kumar Singh highlighted the need to move away from traditional nomination-based cost-plus procurement, focused mostly on the public sector, to a more competitive pricing model where both the public and private sector can compete for orders and said this approach is already being implemented for ship-building and more recently for the fifth-generation Advanced Medium Combat Aircraft (AMCA) project. He was speaking at a defence conclave in Delhi recently.
His remarks come a few days after the government approved the execution model approach for the AMCA project which offers equal opportunities to both private and public sectors on a competitive basis, allowing them to bid either independently or as joint venture or as consortia.
While assuring the private sector about improved Ease of Doing Business and level playing field, Singh urged them to focus on Research and Development and capital formation through investments in capital equipment, machinery and engineering strength.
In the longer run, companies which do not have the engineering manpower, capital equipment or willingness to invest in R&D, should not think of entering into the defence domain, as their contribution to India's strategic autonomy would not be significant until they make such investments in creating localised manufacturing ecosystem in the country, he said.
India currently has 16 Defence PSUs, 430 licensed companies and approximately 16000 MSMEs.
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Speaking about India’s defence vision, Singh said it centres around Aatmanirbharta for preserving strategic autonomy of the country. Pointing out that the entire process of indiginisation has had a major impact over the last decade, he said India has transitioned from being the top importer in 2015 to become one of the top 25 exporters today. "Over 100 Indian companies are now exporting to 100 plus countries today. The list of products includes missiles such as BrahMos, rocket launchers like Pinaka, simulators, armoured vehicles, the Dornier aircraft, different types of ships, and offshore patrol vessels. The upsurge in exports can be gauged from the fact that our exports have grown 30 times in the last ten years to Rs 23,622 crore in the last financial year," a defence ministry release quoted him as saying.
He noted that during the financial year 2024-25, the defence ministry has totally used the defence modernisation budget for the first time in the past five years. The ministry signed contracts worth Rs 2 lakh crore during the last financial year—double that of the figures for 2023-24. He said this would help the ministry demand a larger share in the Union budget.
He further said in the year of reforms—Defence Minister Rajnath Singh declared 2025 as the year of reforms—slashed the timelines for some of the processes in the procurement cycle. This would save about 69 weeks overall, in the process timeline, he added.
Measures such as the concept of deemed licensing beyond a certain time frame to put accountability on concerned government departments, shifting from cost-based pricing to competitive bidding, removing legacy aspects such as product reservation for public sector units, slashing procurement timelines by weeding out rigid and redundant procedures, would lead to genuine broadening and diversification of the defence industrial base, he observed.
Defence