India Inc may soon run war machines

NEW DELHI: In a significant move to encourage India Inc to play a greater role in producing military equipment, the government announced on Friday that premier private companies would be granted special status to permit them to directly import defence technology from abroad.

“The whole idea is to provide incentives,” Defence Minister Pranab Mukherjee said on the sidelines of an awards function here, pointing out that though the defence industry had been opened to the private sector in ‘01 and 28 licences and letters of intent have been issued, “it has not been very effective”.

“The whole objective of the private sector’s participation is to bring technology and also to bring in resources so that the strain on exchequer is comparatively reduced,” he added. Earlier, addressing the function at which defence public sector undertakings (PSUs) received awards for exceptional performance in ‘03-04, Mukherjee said select private companies would be designated “Rakshya Udyog Ratnas (RURs - Defence Industry Champions)”.

“The idea is to encourage such industries to contribute in defence production and enable them to assume the role of systems integrators of large weapon systems and producers of platforms required by the armed forces,” the minister added.

Once accredited as RURs, these industries would be treated on par with defence PSUs and would be “selected for receiving technology and undertaking license production with Transfer of Technology from overseas sources”, Mukherjee said.

Hitherto, only the Defence Research and Development Organisation (DRDO) and defence PSUs were permitted to receive military technology from abroad.

Greater participation by the private sector “would also lead to the expansion of our defence industrial base, enhance indigenous defence capability and ultimately contribute to the combat potential of our defence forces”, Mukherjee maintained. Referring to the just-introduced Offsets policy under which foreign companies entering into defence deals worth more than Rs.3 bn have to invest 30% of this within the country, the minister urged the Indian defence industry to “capitalise” on it.

“The attempt should be to bring in investments in terms of new technologies rather than cater to the market forces. This policy will open up new avenues for growth within the country in terms of industry participation, technology upgradation and employment and throw open many more business opportunities.

“This will also boost our defence exports to a considerable extent,” Mukherjee maintained. In this context, he also referred to the fact that India was the world’s third largest defence importer and that this made it incumbent ‘’to reduce our dependence on imports by taking effective steps to achieve self-reliance in defence preparedness to the maximum extent possible”.

And, as he had done so two weeks ago, Mukherjee again rapped the DRDO, urging it to “gear up ... in order to achieve positive results. “In addition, there is also need to improve interaction and create synergy between DRDO labs and production agencies so that R&D efforts get the required speed and direction.”

Speaking at a seminar on indigenisation, here last month, Mukherjee had hauled up DRDO for not living up to expectations, saying the bulk of military hardware was still being procured from abroad. Aerospace major Hindustan Aeronautics claimed four of the nine awards that were given away Friday.

Among institutional awards, it was cited for excellence in performance and for best performance in exports. HAL’s Aircraft Research and Design Centre was awarded for import substitution by developing software for a fighter aircraft’s mission computer. It’s Rotary Wing Research and Design Centre received an award for innovation for re-engineering the armed forces’ Cheetah helicopter.

Bharat Electronics Ltd received three awards and the Ordinance Factory Chanda and Midhani Melt Group one each.