India’s De-hyphenated Acquisition Policy

It's time to reassess lessons and challenges while avoiding being pawns in the hands of superpowers, Make in India in critical defence technology should not be rhetoric but a reality, writes Prof. SN Mishra.

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THE Nehruvian dirigiste policy with dalliance in defense with the erstwhile USSR for technology transfer to India for building MiG aircraft, tanks and frigates in India was followed by Indira’s strategic partnership with them in 1971.

It ensured that the acquisition of major aircraft, platforms, and systems is generally done as an Inter-Government Agreement (IGA) rather than on a competitive basis. Following the disintegration of the USSR in 1991 and India's adoption of the free market philosophy in 1991, there was a significant shift in India’s defense acquisition policy. The MoD allowed full private sector participation in defense production in 2001, which was the exclusive preserve of Defense PSUs & Ordnance factories, in line with the Industrial Policy Resolution of 1956. FDI up to 26% was also allowed for foreign defense company participation. The DPP 2006 (Defense Procurement Policy) paved the way for India to be perceived as a transparent buyer, with a focus on multi-vendor tendering, and exceptions for IGA (Inter-Governmental Agreement) and FMS (Foreign Military Sales) from the USA.

The Changing Character of Acquisition