The defence ministry’s decision to allow companies outside state control to build fighter jets, submarines and armoured vehicles is likely to help Indian defence manufacturing firms. For one, there will be a question of oversight over private companies and whether the defence ministry has the wherewithal to do so. Second, there would be a need to evolve a mechanism on how to deal with contractual changes. So far, it was easy for the government to seek a change in a contract as most of the companies were state owned, private companies may not be able to adjust to this easily. Thirdly, the future of state-owned giants including Hindustan Aeronautics Ltd and Mazagon Dock Ltd will need to be redefined as over time private players will create parallel manufacturing lines. For now, these firms have orders for many years but after that the government will have to figure out how to balance or take the international route where private sector dominates the space. The policy will give a boost to the ‘Make in India’ policy in the defence sector and set Indian industry on the path to acquiring cutting-edge capabilities which will contribute to building of self-reliance in the vital sector.

(Live Mint)