Export by pvt cos in defence spares may be a reality

Parrikar says rules to be tweaked soon

Export by pvt cos in defence spares may be a reality

With new emphasis to kick-start manufacturing of military hardware in India, the Defence Ministry is modifying internal rules to allow private companies exporting their wares to friendly nations.

“We would be deregulating certain aspects of export conditions. There are too many bottlenecks,” Defence Minister Manohar Parrikar said here last week.

Since he took over as the defence minister two months ago, Parrikar cleared defence projects worth Rs 75,000 crore, out of which projects worth Rs 65,000 crore involve manufacturing in India.

The involvement of the micro, small and medium (MSME) industries sector, too, is being reviewed. Parrikar said his ministry would move an approach note in January, seeking to streamline the processes required to increase participation of the private sector.

The minister met industry captains at a one-on-one interaction in Goa last week, listening to their problems and priorities. Those who attended the meeting include Baba Kalyani of Bharat Forge, Larsen and Toubro, Tata Advanced Systems, Godrej and Boyce, Ashok Leyland, Punj Lloyd, Alpha Design Technologies, Zen Technologies, Data Patterns, Dempo and Pipavav Shipyard.


In the meeting, organised by the Confederation of Indian Industry, the industry representatives suggested no programmes be tendered under the “make” procedure of the Defence Ministry until there was clarity on its final form.

Ever since the “make” provision was introduced in the defence procurement procedure in 2008, there is no major project under this category, which involves developing design capability and intellectual property in the country.

The industry leaders pointed out the Defence Ministry’s “make” procedure was different from the prime minister’s “Make in India” initiative, which is about boosting manufacturing.

In June, the defence manufacturing sector was opened up for the private sector, as the need to obtain industrial licence to produce a large number of components and sub-systems required in military hardware was done away with.

The relaxation was extended to heavy engineering techniques like “casting” and “forging”, which can enable private firms to caste the hull of submarines and forge the barrels of artillery guns in future.

However, manufacturing of tanks and armoured vehicles, aircraft, warships and a large number of arms and ammunition for the Army, Air Force and Navy will remain a “no go area”.

Parrikar said under the “make” category, the government would first identify the products and then fund 80 per cent of the development costs.

“We are now considering 100 per cent of the development cost, provided there is 20 per cent contribution from the MSME sector. The plan is to create a supply chain to take indigenisation up to 70 per cent,” Parrikar added.

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