Does the ownership or the brand of a firm matter for 'domestic sourcing' in strategic procurement? Examine with reference to India's defence procurement policy.

A firm can be judged "domestic" by three tests: its brand, its ownership or its place of manufacture. In 1926, MPs objected to a British Army razor contract going to Gillette. The Government defended it because the company had "British capital and British directors" and would use "British labour" [1]. India's defence policy has since settled the question: the brand does not count, while ownership and the place of manufacture both do, for different purposes.

Brand: largely irrelevant

• A foreign name tells you nothing about where profits, control or production sit. Even in 1926 the Government looked past the American name to ownership and labour [1].
• India's rules never use the brand as a test. They look at who owns the firm and how much value is added in India.

Manufacture: the general test in public procurement

• The PPP-MII Order, 2017 defines a local supplier by local content: at least 50% for Class-I and 20% for Class-II. Since 2020, nodal ministries can set higher levels [2].
• The MoD reserved 26 items only for local suppliers that meet minimum local content [4].
• This lets foreign-owned factories in India qualify, which brings in investment, jobs and technology.

Ownership: decisive at the strategic top

• Under DAP 2020, Buy (Indian-IDDM) and Make categories are reserved for vendors owned and controlled by resident Indians, with FDI ≤49% [3].
• Foreign OEMs can still take part through Buy (Global–Manufacture in India) [3], but below Indian-owned firms in priority.
• Why: In wartime, a foreign parent can be forced by its home government to stop supplying (for example, under export controls or sanctions). Keeping design IPR and spares under Indian owners protects strategic autonomy.

Limitations

• Strict ownership rules may keep out capital and advanced technology.
• Local-content rules can be gamed by assembling imported kits, so value-addition has to be audited.
• Low upfront bids can hide life-cycle dependence on spares. The 1926 razor trade-in tied the Army to buying replacement blades [1].

Ownership matters most where sovereignty is at stake, manufacturing location matters for building the industrial base, and the brand hardly matters at all. India's layered approach should be sharpened with stronger local-content audits, clauses covering life-cycle support and transfer of IPR, and parliamentary oversight. This would turn Aatmanirbhar Bharat in defence from assembly in India into genuine indigenisation.