Indian firms have spurned some $15 billion worth of government tenders to make a range of weapons since 2013, Defence Ministry officials say, in a blow to Prime Minister Narendra Modi and his drive to wean the country off imported arms.
Executives cited unrealistic quality demands from a military short of planes, tanks and guns as a key reason for their reluctance to bid for projects.
Over the past 18 months, 41 requests for expressions of interest for naval projects alone fell through because of problems relating to manufacturing requirements, the Defence Ministry official added.
Trying to move projects along, Modi's government approved an $8 billion proposal to build warships in India in February that had been awaiting cabinet signoff since 2012.
It has also ordered an accelerated local program to build six diesel-electric submarines, in addition to six similar vessels that French firm DCNS is assembling in Mumbai port to replace India's ageing underwater fleet.
A Defence Ministry committee submitted a report last month identifying five private and state-run shipyards where the submarines could be built with a foreign partner. It will now invite expressions of interest for the $8.5 billion project.
Indian Navy’s first Scorpene submarine was launched in Mumbai this week. The diesel-electric vessel INS Kalvari was built by Mazagon Dock Limited in collaboration with France’s DCNS, and it will now undergo sea trials before being formally handed over to the Navy in September next year.
Make in India Campaign
Irked by India's status as the world's biggest arms importer, Modi wants to build an advanced defense industry.
Modi wants to build a strong military after years of neglect that military planners say has left India vulnerable should rivals China and Pakistan ever launch a combined attack, although experts say this is highly unlikely. India is being challenged, however, in its Indian Ocean backyard, where China's more modernized navy is starting to assert itself.
Defence Minister Manohar Parrikar has said new defense production policies will be unveiled this month to address the concerns of private firms: opaque procedures, unrealistic quality requirements and slow decision-making.
"We're trying to simplify procedures, create a level-playing field but still there are many cases of zero participation in tenders," said G. Mohan Kumar, the defense production secretary leading the localization drive.
Experts said one problem is that some military officers eye technology only available in the west, without understanding what Indian firms can produce.
"The armed forces are reluctant to accept hardware that doesn't have a record in operational conditions. Indian companies have no track record," said Bharat Karnad at the Centre for Policy Research in New Delhi.
Retired vice admiral Premvir Das added that to expect Indian companies to manufacture major defense platforms in the foreseeable future is to "live in a dreamland".