The Hindu Business Line : Pranab urges India Inc to pick up defence orders

The Defence Minister, Mr Pranab Mukherjee (left), with the FICCI President, Mr Onkar S. Kanwar, at a seminar on Indian Defence Industry in New Delhi on Wednesday. - Anu Pushkarna

New Delhi , June 8

THE Defence Minister, Mr Pranab Mukherjee, said on Wednesday that the Indian industry should attempt to pick up defence production orders through increased public-private partnership and suggested that as much as Rs 4,000 crore could be available for indigenous production.

Addressing a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here, Mr Mukherjee said a very significant portion of the Rs 34,375 crore provided for capital expenditure in the defence budget for this year would be spent on imports.

"This trend needs to be reversed, with industry needing to assume a much greater role in indigenisation of the imported products. Even a 10-15 per cent reduction in imports will not only help in saving precious foreign exchange, but also increase the growth rate in the manufacturing sector and create job opportunities in large and small scale ancillary industries," the Minister said.

Mr Mukherjee pointed out that the recommendations of the Vijay Kelkar Committee on policy issues and initiatives and integration of users, the Defence Ministry and the Indian industry for the greater involvement of private players in the manufacture of arms are under active consideration. He said the Government favours an expeditious implementation of the suggestions put forward by the Committee.

The Minister added that the Government had accepted, in principle, to have an `Offset Policy' to leverage the country's position as a large buyer. The Department of Defence Production is finalising the modalities for the introduction of a specific clause on `offsets' in the Requests for Proposals (RFPs) for supplying defence products. The methods of evaluation of offsets are currently being worked out.

Mr Alok Perti, Joint Secretary (Supplies), Defence Production, said the private sector could come in at decision-making levels (such as the categorisation committees and Defence Production Boards) and could suggest a parallel approach to product development and maintenance services. The RFPs by private players would include an offset clause for major contracts, where the offset would be a minimum of 30 per cent of the cost of acquisition, Mr Perti said. Responding to Mr Mukherjee's suggestions, the FICCI President, Mr Onkar S. Kanwar, said that FICCI would work towards a stronger public-private bonding.

Mr Kanwar highlighted a seven-point action agenda, which stipulates that the criteria for procurement by the Ministry of Defence should be of high standards, competitive prices and the best delivery terms. Competitive bidding should be introduced for procurement ; overseas suppliers should tie up with a licensed Indian partner at the project definition stage; and joint production development by the Defence Research and Development Organisation and the corporate sector should be done in a time-bound manner.

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