Defence Minister Manohar Parrikar will tomorrow meet industry associations to take their views on the controversial “strategic partnership” agreement that the government plans to enter into with private firms in critical defence projects like building submarines and fighter planes.
Defence sources said five members each from CII, FICCI, ASSOCHAM and PHD Chambers of Commerce and Industry, besides a defence grouping DIIA, will meet Parrikar tomorrow which will be followed by a dinner.
The industry chambers are expected to express their strong reservation on the subject to the minister.
The feeling among the private industry players is that only the big firms will benefit out of this move.
However, even large firms are not open to the idea since they feel that they would be restricted to just specific fields and, therefore, their overall investment and plans will get affected.
Captain (Retd) Amrinder Singh, a member of the Parliamentary Standing Committee on Defence, had recently written to Parrikar against the proposed strategic partnership, saying this would only lead to “crony capitalism”.
At the recently held Defexpo in Goa, various industry leaders had expressed their reservation against the move to create strategic partnership.
Industrialist Anil Ambani, who is eyeing the defence sector through his newly set up Reliance Defence, welcomed the concept of strategic partners but said there needs to be competition in inter and intra segments.
The big players are concerned over a clause that would restrict one company each to the ten broad areas of manufacturing like warships, land systems and submarines.
“Our policies have to be in line with global best practices. Sub-optimal division or groupings will make the industry inefficient. For instance, the division of ship building into above the water and below the water categories,” Ambani had said at a Global Investors Summit at the Defence Expo.
A top executive of another defence firm had left everyone surprised with his strong remarks against the concept of strategic partnership.
His argument was that “strategic partnership will lead to a new caste system within the defence sector” and only few companies will benefit.
Former DRDO chief V K Aatre had earlier this year submitted a report to the Defence Ministry recommending guidelines for selecting domestic private firms for strategic partnership.
The Aatre Committee was set up by Parrikar following recommendation by the Dhirendra Singh Committee, which had come out with a report detailing the changes needed for the new Defence Procurement Procedure.
The committee had recommended that for ‘Make in India’ initiative to become wider in the defence sector, the government should adopt a strategic partnership model, whereby a private firm is chosen for the development of a specific identified platform.