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The ministry of defence has cleared the names of eight private companies for the manufacture of spares and parts needed for the combined forces, Joint Secretary of Department of Defence production and supplies, Alok Perti, said on Thursday.
Speaking to reporters in Kolkata after addressing a Confederation of Indian Industry meet, Perti said that the companies had already been issued Letters of Intent, after which these would be converted into licenses.
Companies, which have been given LoIs included Mahindra & Mahindra, Larsen & Toubro, Jindal, Max Aerospace and Aviation and Ramoss India, among others.
Initially, 15 firms had shown interest in getting engaged in defence production, out of which eight had been cleared.
The defence official said that these companies would first have to start production to get these LoIs converted into licenses.
He said that in the interest of national security, production by the private firms would be subject to monitoring by the defence ministry.
Products, which will be manufactured by the private firms, included bullet-proof jackets, avionics and other related spares used by the armed forces.
With a procurement budget of Rs 14,000 crore (Rs 140 billion), the defence sector offers enormous business opportunities for the Indian industry.
New policy reforms allowed domestic private participation and 26 per cent FDI in the defence sector.
Perti said that besides the defence sector, these private companies would be allowed to sell their products to other parties provided they furnish the details relating to the quantity of sale and nature of products.
On the issue of exports, he said that in the financial year 2002-03, the defence sector had earned Rs 200 crore (Rs 2 billion). Till the enumeration of the new policy, besides imports, the Ordnance Factory Board catered to the needs of the entire defence sector.