The defence sector in India has been witnessing a rapid growth in recent years. The country has been actively seeking foreign partnerships and investments in its defence industry, with the aim of building a strong domestic defence manufacturing base, and reducing its reliance on imports. To this end, the government launched the ‘Make in India’ initiative in 2014, designed to attract international companies to set up production facilities in India. This initiative has seen a lot of success, with many global players making significant investments in the Indian defence sector.
One such country that has shown keen interest in the Indian defence market is Israel. The two countries have been long-standing partners in the field of defence, with Israel being one of the top suppliers of military equipment to India. Israeli companies have been actively participating in ‘Make in India’ projects and have been successful in securing significant contracts. However, amidst this growing partnership, there have been discussions around certain issues that Israeli companies are seeking more flexibility on, particularly in the areas of ‘Make in India’ and ‘IP protection’ in defence projects.
The ‘Make in India’ initiative provides a conducive environment for foreign companies to invest in and manufacture defence equipment in India. It offers various benefits, such as tax incentives, simplified procedures, and faster approvals. However, some Israeli companies feel that the policies related to ‘Make in India’ projects are not flexible enough. They believe that the strict requirements and timelines set by the Ministry of Defence (MoD) for offset contracts can be challenging to meet. These offset contracts require foreign companies to invest a certain percentage of the contract value into India’s defence manufacturing sector. This can often prove to be a hurdle for Israeli companies, who are looking to invest in research and development (R&D) activities rather than direct offset investments.
Another area of concern for Israeli companies is the issue of Intellectual Property (IP) protection. The Indian government’s emphasis on building a domestic manufacturing base has led to a greater focus on technology transfer and indigenization of defence equipment. While this is a positive step towards self-sufficiency, it has raised concerns among Israeli companies regarding the protection of their IP. They fear that their proprietary technology and know-how may be compromised during the transfer process, which can have long-term consequences for their business. To address this issue, Israeli companies are seeking more stringent IP protection laws and regulations, and assurance from the Indian government regarding the safeguarding of their proprietary technology.
Despite these concerns, Israeli companies remain optimistic about the potential of the Indian defence market and are committed to further strengthening the partnership between the two countries. In a recent meeting between Indian and Israeli defence officials, both sides reaffirmed their commitment to enhance cooperation in various defence-related areas, including joint research, development, and production of advanced defence equipment.
Moreover, Israeli companies have also shown flexibility and adaptability to meet the requirements of the Indian defence market. They have been successful in partnering with Indian companies and transferring technology, thereby promoting the ‘Make in India’ vision. For instance, Israel Aerospace Industries (IAI) has collaborated with Dynamatic Technologies Ltd to manufacture composite aerostructures for unmanned aerial vehicles (UAVs) in India. This joint venture not only supports the ‘Make in India’ initiative but also showcases the technological capabilities of both countries.
Furthermore, the Indian government has taken several measures to address the concerns of Israeli companies. In 2020, the MoD revised the offset policy for the defence sector, providing more flexibility to foreign companies in fulfilling their offset obligations. The revised policy aims to encourage R&D investments, and foreign companies can now claim offset credits for investments made in local defence R&D centres. This move has been welcomed by Israeli companies, who see this as a positive step towards addressing their concerns regarding offset contracts.
The Indian government has also initiated efforts to strengthen IP protection laws and regulations in the country. In 2016, India signed the General Security of Military Information Agreement (GSOMIA) with Israel, which facilitates the protection of classified military information shared between the two countries. This agreement provides a framework for the protection of technology, intellectual property, and other sensitive information, assuring Israeli companies of the safety and confidentiality of their proprietary technology.
In conclusion, the relationship between India and Israel in the field of defence has been strong and will continue to evolve in the future. The ‘Make in India’ initiative has provided a platform for both countries to collaborate and build a robust partnership. Despite some concerns, Israeli companies have shown
