India to relax arms purchase rules

India, which plans to purchase billions of dollars worth of military hardware in the next five years, will soon relax strict rules on arms imports, officials say.

A new Defence Procurement Policy, or DPP, will be unveiled by April, Defence Minister A.K. Antony said Saturday at a defence fair in the capital.

"We have been fine-tuning and improving the DPP based on periodical reviews [and] the current procurement procedure is also under review to make it more transparent and user-friendly," he said.

Many of the major players in the race to grab a share of arms deals worth $30bn by 2012 see the current so-called offset policy part of the DPP as restricting growth.

The policy stipulates foreign firms selling products to India must re-invest up to 50 per cent of the total amount through tie-ups and services in the country.

Antony promised the new policy would help India's fledgling defence sector.

"For our defence industry to expand and to be able to meet critical technological requirements of armed forces, there is need for far greater synergy between private players and the government."

Global vendors have recently "publicly questioned" the capacity of India's private sector to absorb largescale joint ventures with overseas companies, the Press Trust of India said.

Others said the new rules would take into account the "fears and reservations" of global firms on re-investment.

"Our procurement policies which were formed in 2006 are restrictive and now they will become wider-based and easy," a senior defence ministry official said.

Global companies including US-based aerospace firm, Lockheed Martin however said they would continue to support India's offset rules in any form.

"We have done enormous offset worth $37bn around the world and technology is our capability which would also benefit India," said Lockheed vice president Philip Georgariou.

BAE Systems said it was locally building 42 of the 66 Hawk trainer jets it sold to India in 2004 for 1.45 billion dollars as part of its offset obligations.

 

"Offset is certainly a concept we supported even before the recent regulations in India," BAE spokesman Guy Douglas said in a statement. (AFP)