SOURCE: AFI
In a significant shift aimed at fostering a more inclusive and competitive defence manufacturing ecosystem, India’s Ministry of Defence (MoD) is planning to expand competitive bidding for weapons procurement for the armed forces. This move is expected to level the playing field for private sector companies, which have long been overshadowed by Defence Public Sector Undertakings (DPSUs) in securing production contracts. The initiative reflects the government’s broader push to transition away from the practice of directly awarding procurement contracts to public-sector entities without a tendering process, according to a recent report by Business Standard.
Historically, the procurement process has heavily favored DPSUs, with the majority of production contracts being allocated to these state-run entities. This has limited the private sector’s ability to compete and contribute meaningfully to India’s defence manufacturing capabilities. However, the MoD’s new approach signals a commitment to transparency, efficiency, and greater private-sector participation—key pillars of the government’s ‘Aatmanirbhar Bharat’ (self-reliant India) vision.
Defence Secretary Rajesh Kumar Singh, speaking to Business Standard, emphasized that the ministry is prioritizing a more expeditious industrial licensing process in the defence sector. “The MoD is focusing on a more expeditious industrial licensing process in defence and taking additional steps to enhance ease of doing business. This is an ongoing effort involving multiple branches of the ministry, particularly the Department of Defence Production, along with the Department for Promotion of Industry and Internal Trade and the Petroleum and Explosives Safety Organisation,” Singh said.
The ministry is also addressing long-standing concerns raised by private industry stakeholders. Among the key issues are the practice of nominating DPSUs for military acquisitions without competition and the ‘no-cost, no-commitment’ approach to product trials for capital procurements. Under this policy, private companies bear the full cost of evaluations without any government funding or assurance of a purchase order post-trial. These concerns are now slated for discussion with all stakeholders, signaling a willingness to create a more equitable environment for private players.
The push for competitive bidding aligns with broader efforts to enhance India’s self-reliance in defence production, particularly in critical domains like aerospace. Recently, the Empowered Committee for Capability Enhancement of the Indian Air Force, chaired by Defence Secretary Singh, submitted a report to Defence Minister Rajnath Singh. The report outlined key thrust areas and provided recommendations for medium- and long-term measures to strengthen the Indian Air Force’s capabilities.
A Ministry statement highlighted the report’s emphasis on fostering ‘Aatmanirbharta’ in the aerospace sector, noting that “the need for impetus to enhance self-reliance in the aerospace domain with the private sector complementing the effort of Defence Public Sector Undertakings and the Defence Research and Development Organisation (DRDO)” was a central theme. This acknowledgment underscores the growing recognition of the private sector as a vital partner in achieving India’s defence goals.
The MoD’s decision to expand competitive bidding is a pragmatic step toward dismantling the monopoly-like dominance of DPSUs and encouraging innovation and efficiency through private-sector participation. By addressing systemic barriers—such as opaque nomination processes and the financial burden of unfunded trials—the ministry is laying the groundwork for a more dynamic and collaborative defence industry.
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