This article is a continuation of a series explaining the obstacles stopping Pakistan’s private sector from properly supporting the country’s defence requirements.
In the previous analysis, Quwa examined how Pakistan’s procurement policies – namely the “no cost, no obligation” requirement – have largely undermined the incentive for private investors to raise production capacity and engage in research and development (R&D).
In that article, this author stated:
To put it briefly, “no cost, no obligation” means that if a private company responds to an armed forces requirement with an indigenous solution, the state will neither fund nor co-fund the development of that solution nor commit to buying the resulting product.
The private company must finance the engineers, prototypes, testing, tooling, and refinement, while the state retains the freedom to walk away at the end of the process. Therefore, the state carries little of the development risk and provides no certainty that a successful program will generate an order.
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