Strategic Partnership Model

Why in news?

Defence Minister held consultations with representatives of Chambers of Commerce and Industry (CII) on the proposed Strategic Partnership (SP) model.

What is strategic partnership?

• One company would be selected for each area based on its competence.
• That company would then tie up with the foreign Original Equipment Manufacturer selected through the procurement process, to build the platform in India with significant technology transfer.

What is the need?

• Despite having a large defence manufacturing base and 52 Defence Research and Development laboratories, India’s Self Reliance Index (SRI), i.e. percentage of imports in value to total defence acquisition, remains at a 0.3 since 1992.
• A Self Reliance Index Committee under Dr. APJ Abdul Kalam had identified the need to improve the SRI to 0.7.

What are the advantages?

• The government intends to boost private sector participation.
• It intends to create domestic expertise in four key areas, namely, fighter aircraft, helicopters, submarines, and armoured vehicles and main battle tanks.
• It is intended to enhance competition, increase efficiencies and facilitate faster and more significant absorption of technology.
• It is also aimed at creating a tiered industrial ecosystem, trigger innovation and enable participation in global value chains as well as promote exports.

What are the apprehensions?

• The Armed Forces feel that the SP model will block new technology and new players coming to the defence sector.
• The existing defence players argue for committed orders for the next 30 years to give them the economies of scale as defence involves large investments.

Source: The Hindu