Private industry takes a lead in guns manufacturing
Well before the government came out with enhanced FDI policy of 49 percent limit for multinational companies in defence sector, some of the leading Indian private defence players had formed alliances with the foreign partners to take part in India’s US$ 4 billion artillery modernization program.
The foreign partners would have preferred to directly sell their guns to India, but considering the new offset laws under which there is compulsion to source 30 to 50 percent of their parts from India, they preferred to chose Indian partners and transfer their manufacturing know-how to Indian firms, leaving the responsibility on them to enter into the bidding process and bag orders. These Indian private firms in fact were acting as their Indian conduits that will also bring them good profit as royalty.
After the last Indian order to Bofors AB in mid eighties, the Indian MoD mishandled the acquisition process and the army is still waiting for new inductions after almost three decades.
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