Defence Minister Nirmala Sitharaman has ruled out offering incentives and subsidies to domestic defence armament manufacturers citing global trading rules under the World Trade Organisation (WTO), even as they continue to reel under severe challenges to meet the same quality standards as the foreign original equipment manufacturers (OEMs).

“It is true that the domestic defence manufacturers do not have a level playing field, but they cannot be offered any concessions or subsidies as they would be in violation of WTO norms,” Sitharaman told presspersons here Wednesday at the opening session of the DefExpo 2018.

At this year’s DefExpo, which is a biennial event to exhibit land, naval and internal homeland security systems, the theme is ‘India: The Emerging Defence Manufacturing Hub.’

The government also said it is in the process of rolling out the Defence Production Policy (2018) (DProP 2018), which would address all the concerns and challenges of the domestic defence industry.

“The draft policy was released for public consultation. We have received over 100 comments from various stakeholders. We are in the process of examining those comments and based on consultations with other ministries, the policy will be placed for final approval. We hope to see the final policy very soon … Consultation process is on, we should be able to do it as soon as possible,” said Ajay Kumar, Defence Secretary (Production), Ministry of Defence.

The draft Defence Production Policy (DProP 2018) was released for consultation on March 22. Once the consultation process is over, it will be put before the Cabinet for approval.

In an effort to establish a level playing field for domestic arms makers in the private and public sectors, the government is also amending the Strategic Partnership (SP) Policy under the Defence Procurement Procedure, 2016 (DPP 2016).

“The DPSUs are even now eligible to enter into strategic partnerships with foreign OEMs. These are still early days, we are working on it. We will take a view on whether or not and to what extent the DPSUs will be involved at an appropriate time,” said Defence Secretary Sanjay Mitra.

The SP Policy was rolled out in May last year under which domestic private players would collaborate with select foreign vendors. This would be applicable for procuring some critical equipment – fighter jets, submarines, military choppers and battle tanks. However, not a single project has taken off under the policy since then, leaving many to question the usefulness of such a policy.

“One of the main outcomes that we are trying to achieve through this policy is to project India as one of the new and emerging manufacturing hubs for defence systems,” said Kumar. According to Mitra, the government has taken the first step in implementing the SP Policy by announcing the request for information (RFI) for procuring 110 fighter jets for the Indian Air Force.

The Defence Ministry also refuted claims that the RFI to purchase the fighter jets under a $15-billion deal is a repeat of the MMRCA (Medium Multi-Role Combat Aircraft) deal that was announced by the UPA government in 2008 that was eventually scrapped.

On the issue of the armed forces hankering for imported armaments as opposed to homegrown ones, Minister Sitharaman said while the armed forces are free to choose their weapons, there has to be a “fine line’ between procuring domestic and imported products.

“When I am promoting Indian exports, Indian manufacturing, I am also telling the forces to as much as possible procure domestically … I would want to draw a thin line between the government’s enthusiasm to make sure the production capabilities are such that they meet international standards and are export-worthy and the other side of the line where the Army, Navy or Air Force make their decision on what they want, what combination of equipments they want and in that combination if an India produced item fits in well … I can only go that far and not further, just as they can only go that far and not further without compromising each other’s interests,” Sitharaman added.