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New defense production policy will encourage private players

Discussion in 'Indian Defence Forum' started by Veer, Feb 13, 2010.

  1. Veer


    Dec 30, 2009
    +0 / 307 / -0
    New defense production policy will encourage private players


    After a few piecemeal measures over the last decade to promote private sector participation in the arms manufacturing arena, the government is now finally formulating a defence production policy (DPP) to bolster the country’s indigenous military-industrial base.

    This comes in the backdrop of the acutely embarrassing situation wherein India, which fancies itself as a emerging superpower, still continues to import almost 70% of the requirements of its armed forces.

    “We will bring in the DPP within a month or two… We have already held meetings with different stakeholders and industry chambers,” said defence production secretary R K Singh on Friday, in the run-up to next week’s DefExpo-2010.

    The main thrust of the DPP, which will usher in `a orientation change’, would be to ensure that `most’ of the weapon systems and platforms required for the nation’s security are made indigenously, said Singh.

    For this, long-term perspective plans of Army, Navy and IAF will be examined to identify what all systems can be developed indigenously, with the remaining being imported. “Gradually, we intend to make or integrate most of the platforms here and reduce our dependence on imports,” said Singh, adding the government would be willing to fund 80% of the development costs.

    But all this will take a lot of doing. Apart from the government’s sheer inability to get private players to enter the high-tech defence production sector, which requires large capital investments, the problem is compounded by the lethargic performance of the Defence Research and Development Organisation (DRDO), eight defence PSUs and 39 ordnance factories.

    This has meant that India continues to be the developing world’s largest arms importer. It has inked defence deals worth a staggering $50 billion since the 1999 Kargil war, mainly with foreign companies, and intends to spend much more in the coming decade, as reported by TOI earlier.

    It was in 2001-2002 that the defence industry sector was opened up to 100% private investment, with up to 26% foreign direct investment (FDI). The defence sector till then was strictly the preserve of the public sector.

    While some companies like L&T, Tatas, Mahindra and Mahindra have ventured into the defence sector, the overall response has been quite poor due to the government’s half-hearted policies.

    The government, for instance, has now virtually gone back on its earlier promise to accord the status of Raksha Udyog Ratnas to select private players, which would have ensured that they were treated on par with defence PSUs.

    It has also ignored persistent demands for allowing 49% foreign investment in the defence sector instead of the present cap of 26%. Defence minister A K Antony, on his part, however, says that “minus corporatisation, we will give more room to the private sector” now.

    New defence production policy will encourage private players idrw.org
  2. fanboi

    fanboi BANNED

    Feb 7, 2010
    +0 / 32 / -0
    Great, hopefully this will encourage greater efficiency.