Union Defence Minister Mr Pranab Mukherjee stressed the need for the corporate sector to adopt a greater role in India¿s defence sector. He was delivering the first annual lecture of the ORF Mumbai Chapter of Observer Research Foundation (ORF), on March 12, 2005.
Union Defence Minister Mr Pranab Mukherjee stressed the need for the corporate sector to adopt a greater role in India's defence sector. He was delivering the first annual lecture of the ORF Mumbai Chapter of Observer Research Foundation (ORF), on March 12, 2005.
Mr Pranab Mukherjee spoke on the theme 'Corporate Sector in India's Defence'.
Addressing a distinguished gathering comprising top officers from the defence forces, corporate leaders, senior academics and the media, the defence minister said there is a need to accept change in the environment of liberalization and competitive global economy.
He expressed his desire to see the country become self-reliant in defence production and said the private sector must do more to contribute to India's might.
"Although most of the country's defence production comes from the 39 ordnance factories and large Public Sector Undertakings there is a significant contribution made by the private sector. These production units in the public sector do heavily depend upon private sector enterprises for supply of raw materials, components and sub-assembles in their production. Of the total purchases of Rs. 5,500 crores made by these PSUs, approximately Rs. 1,200 crores is obtained from the private sector," he said.
The minister said the government in May 2001 decided to open the defence industry for private sector participation. "As of date 20 Letters of Intent (LOI) have already been issued to the private sector companies. Unfortunately the progress witnessed in this area has been very satisfying," the minister said.
The minister hoped that with the Kelkar Committee submitting its report the private sector will increase its participating the in the defence sector.
Mr. Mukherjee drew the attention of the audience to the increasing defence expenditure of the country. "At Rs. 83,000 crores this year, almost 50% will be spent on imports," the minister said, stressing the need for greater indigenous content.
"The industry needs to assume a much greater role in indigenisation and even if 10% reduction is achieved in imports, it is likely to have far reaching impact both in terms of increasing defence self-reliance and giving a major push to India's industrial growth," he said.
The minister acknowledged that changes had to brought about in the processes of defence acquisition "These changes will give industry the due encouragement and support for achieving greater goals."
Referring to the strengths of the country, the defence minister said, "In India, we have availability of highly skilled manpower, low cost of production and a reasonably good infrastructure."
"While the trends in the Industry are encouraging, I would expect greater investment in R&D, if good results were to be witnessed in the defence sector. DRDO should increasingly encourage the industry by jointly taking up research and design work with them," he added.
Earlier, ORF Chairman Mr. R. K. Mishra in his inaugural address laid out issues in corporate sector's participation in the India's defence production. "India's corporate sector has much to offer both in technology and scale of investment in defence production, provided three major hurdles are removed. Firstly, the long procurement process acts as a major disincentive for greater corporate participation; secondly, there is a lack of long term procurement planning for major systems and finally, a near blanket of ban on export of weapons systems and equipments."
Giving an overview of the government-private sector endeavour in defence, former chief of the Army Staff and founding President of the ORF Institute of Security Studies, General (Retd) Ved Malik, spoke about the several task forces and specialist groups set up for the purpose of establishing a synergy between the private sector, defence industries and the armed forces. "While they have achieved fair amount of success, many of them are not cost effective today. While their usefulness to cannot be denied, I have no doubt that they have considerable scope of improvement." He said. "Until we are capable of developing advanced technologies and weapon systems indigenously, we have to resort to direct imports."
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