Private companies to arm police with modern weapons

(Adding muscle to Indian policing)

by Ajai Shukla

Business Standard, 1st Jan 10

With the Ministry of Home Affairs (MHA) having failed to procure modern rifles and carbines for its state and central policemen from the international market, it is now looking to India’s private sector for providing police forces the weaponry needed to respond to Mumbai-style terror attacks.

On 21st December, the MHA promulgated a draft Arms and Ammunition Manufacturing Policy, which will allow the DIPP to issue licences to large private companies, which are capable of producing advanced weapons, and of investing over Rs 50 crores, for manufacturing arms and ammunition to be “primarily supplied to Central Para Military Forces, Defence and State Governments on tendering basis…” The draft policy stipulates an FDI cap of 26% on companies applying for licences.

The MHA had initially looked towards foreign suppliers for replacing the outdated weaponry of 15 lakh state policemen and 7.5 lakh jawans of the Central Police Organisations (BSF, CRPF, CISF, etc). It was envisaged that global suppliers like Singapore Technologies Kinetic (STK) and Israel Military Industries (IMI) would partner the Ordnance Factory Board (OFB) to produce modern rifles and carbines in India for the military and the police. That plan was stymied when STK and IMI were blacklisted by the MoD after the arrest last May of Sudipta Ghosh, the former OFB chief, on charges of corruption.

Nor was it possible for the MHA to procure weapons from the Defence Ministry’s suppliers, the two ordnance factories at Ishapore and Kanpur. With an annual production capacity of just 100,000 rifles, these factories barely met the annual replacement requirement of India’s 17 lakh soldiers, sailors and airmen.

With the foreign and PSU options foreclosed, now the private sector is being invited to pick up the slack. There are already 95 private companies with decades-old licences to manufacture arms, but those small companies are licensed to manufacture only shotguns of the kind used by bank guards and for hunting. The MHA, however, needs rifles and carbines, which can be aimed to longer ranges and are capable of automatic fire, i.e. emitting a continuous stream of bullets when the trigger is pressed.

For the private sector, this is déjà vu. In 2001, after a cabinet decision to allow the private sector into defence manufacture, the DIPP (vide Press Note No 4 of 2001) had permitted private companies to manufacture defence equipment, including arms and ammunition, subject to an FDI cap of 26%. Large industrial houses interested in defence manufacture, including Larsen & Toubro and Mahindra Defence Systems, had applied and obtained Letters of Intent (LoIs) for manufacturing several categories of defence equipment, including small arms (pistols, rifles, machine guns and carbines) and ammunition.

But in 2006-07, when Larsen & Toubro sought a formal manufacturing licence from the government, the MHA insisted that no licences be granted for small arms and ammunition. The reason, as the draft policy obliquely admits, was the MHA’s wish “to ensure total non-proliferation”; North Block apprehended that extremists might siphon off weaponry from private production units.

Now, clearly, that apprehension has been trumped by the urgent need for modern weaponry. The MHA, however, still intends to strictly control the grant of licences for manufacturing arms and ammunition; the draft policy stipulates that applications “may be considered by DIPP as per procedure in consultation with MHA.”

Manufacturing world-class arms and ammunition will be a challenge for Indian private companies, involving as it does expensive and closely guarded technologies. Admitting that a foreign partner would be essential, an industry source said, “Small arms manufacture is as much an art as an industrial process. We will have to tie up with a foreign partner like, perhaps, Heckler & Koch. An FDI cap of 26% means that they will be reluctant to transfer crucial technologies; we may be limited to licensed manufacture.”

[The draft policy has been put up for public comments on the MHA website (http://www.mha.nic.in/pdfs/DAAM-Policy-211209.pdf). Comments are to be submitted by 6th January 2010.]