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SOURCE: AFI

The year 2025 could herald a significant transformation in India’s defense procurement policy as the Ministry of Defence (MoD) mulls over a new reform that might ban the procurement of foreign license-manufactured weapons systems for the Indian Armed Forces unless local Indian firms hold the Intellectual Property (IP) rights of these systems. This move is part of an ongoing effort to further the ‘Aatmanirbhar Bharat’ (Self-reliant India) initiative, aiming to reduce reliance on foreign defense equipment and bolster indigenous manufacturing.

Currently, under the existing procurement guidelines, foreign weapons systems are permitted for acquisition if they boast an indigenous content of over 60%. However, the practical implementation of this rule has been fraught with challenges, primarily due to difficulties in accurately assessing the level of local content in these systems. The complexity arises from the integrated nature of modern defense equipment, where components might be sourced globally, making it hard to distinguish between what is truly ‘indigenous’.

The push for such reforms is expected to be announced later in 2025, potentially during high-profile defense exhibitions or through new policy documents. The MoD’s strategy seems to be moving from merely encouraging local manufacturing to ensuring that the technology itself is indigenously controlled.

Industry stakeholders have mixed reactions. While some local manufacturers welcome the move as a chance to elevate their status in the global defense market, others express concerns over the readiness of Indian industry to take on such responsibilities. There’s also the issue of existing procurement contracts and how they would be affected by these new rules.

However, the MoD seems determined, with preliminary discussions already hinting at creating a framework that could support Indian companies in acquiring IP or developing it independently. This might involve more collaborative R&D between the DRDO (Defence Research and Development Organisation), academia, and private sector, along with incentives for technology transfer.