Indian cabinet okays new defence policy to boost local companies

Modi govt to pick local companies to manufacture fighter jets, armoured vehicles, helicopters and submarines

NEW DELHI: India's cabinet approved on Wednesday a long-awaited policy to boost local manufacturing of high-tech defence equipment and cut down reliance on expensive imports.

Under the new Strategic Partnership model, the government will pick Indian companies to tie up with foreign organisations to manufacture fighter jets, armoured vehicles, helicopters and submarines locally.

Prime Minister Narendra Modi's government has raised the limit on foreign investment in the defence sector and encouraged tie-ups between foreign and local companies under the "Make in India" manufacturing campaign.

"The new policy will give a substantial boost to domestic manufacturing and service provision, thereby creating employment," a government statement said.



"Preference in government procurement will be given to local suppliers," it added.

India has been investing tens of billions in updating its Soviet-era military hardware to counter long-standing tensions with regional rivals China and Pakistan.

But Modi has said he wants to end India's status as the world's number one defence importer and to have 70% of hardware manufactured domestically by the turn of the decade.

Last year, British defence giant BAE Systems said it had chosen India's Mahindra group to build a plant for assembling howitzer artillery guns in the country.

The cabinet also scrapped the Foreign Investment Promotion Board, a government panel perceived as being bogged down by stifling bureaucracy.



Foreign investments requiring government approval would in future be cleared by individual ministries, the government said.

"Foreign investors will find India more attractive destination and this will result in more inflow of FDI (foreign direct investment)," it said in a statement.