The British Ministry of Defense recently announced potential plans to revamp its strategic sourcing and procurement practices, and it appears the Indian Ministry of Defense may soon do the same. Reports reveal the agency could plan to shift its purchasing focus from foreign products to domestically manufactured weapons and tools. The move comes partly as the Ministry finds itself involved in a scandal with Italian firm AgustaWestland, which has been linked to alleged kickbacks sent to India through phone software contracts. As a result, the Ministry has removed software services out of the products and services that be listed as offsets, which are meant to improve domestic manufacturing and investments.
The change in procurement policies would be an enormous change for the Ministry, which currently acquires 70 percent of its purchases from foreign companies, while the remaining 30 percent is split between public sector operations and some private companies. This encourages foreign contractors to work with Indian subcontractors and enhance domestic growth.
New rules would prioritize Indian private sector purchases and make it easier for these private firms to receive Ministry purchases and contracts. This could allow them to expand their operations and grow, as the Buy and Make (Indian) program would require the department to purchase a minimum of 50 percent domestically made products.
Not only could this boost domestic manufacturing and innovation, it could also potentially result in cost savings for the Ministry in the long run. Many organizations that strategically source and procure goods domestically find that lower shipment costs and labor expenses can help them cut expenses and logistical timeframes, allowing them to receive products more quickly and spend less than they may have been purchasing goods from foreign countries.