India's Ministry of Defence has made a major shift in its procurement policy for 114 Multi-Role Fighter Aircraft (MRFA). The government now insists on full manufacturing and technology transfer within India.
The $20 billion deal, one of the world's largest defence contracts, has attracted major global players like Dassault, Boeing, SAAB, Lockheed Martin, and others. However, the new policy may reshape the competition, as frontrunners like Dassault (makers of the Rafale) might be hesitant to fully transfer technology.
This move signifies India's growing ambition to become a defence manufacturing powerhouse. Inspired by a recent deal with GE Aerospace to produce jet engines domestically, the government aims to replicate this success with the MRFA program.
While the decision is lauded for its potential to boost the domestic defence industry and create jobs, it could also delay the procurement process. The Indian Air Force currently faces a shortage of fighter squadrons, operating 31 against a sanctioned strength of 42.
The government has also raised the Foreign Direct Investment (FDI) limit in the defence sector to 74%, further incentivizing foreign companies to partner with Indian firms. This policy shift aligns with Prime Minister Narendra Modi's vision of "Atmanirbhar Bharat" (Self-Reliant India).
Industry experts believe that while the new policy presents challenges, it also opens up significant opportunities for Indian companies to participate in advanced manufacturing and technology development.
The coming months will reveal how global players respond to this new requirement and how it shapes India's future defence landscape.
