New Delhi: Indian industry will have to step up investment in R&D to improve its technological capability to meet the requirements of the armed forces, Defence Minister A.K. Antony said here Tuesday.

"Indian industry has to improve its technological capability so as to become suppliers of complete systems rather than just being suppliers of raw materials and components," he said while addressing the INDAIR 2008 seminar on "A strategic partnering of Indian Air Force and industry on modernisation and indigenisation" here.

The Confederation of Indian Industry (CII) and the Indian Air Force (IAF) have jointly organised the two-day seminar.

Expressing concern over the failure of the defence production units to adhere to time schedules, Antony said this was affecting the government's initiatives towards indigenisation and upgradation of the defence forces.

He said the recently announced Defence Procurement Policy (DPP) was an opportunity for the Indian industry to become an active partner in the modernization of the defence forces.

In his address, Minister of State for Defence Production Rao Inderjit Singh conceded that the IAF inventory was decades-old and had to be speedily upgraded.

"While earlier, one could say that the modernisation process was hindered by the lack of funds, this was not the case today. It is for the industry to step forward and take up the challenge," he noted and expressed optimism that Indian industry could become an active systems integrator for the defence forces and should actively join hands with the defence public sector undertakings.

Delivering the keynote address, IAF chief Air Chief Marshal F.H. Major said the force was on the threshold of a major transformation.

Pointing out that today 70 percent of the IAF's equipment needs were met by foreign companies, he said it was important to reverse this " if we are to meet our goal of strategic self-reliance".

"The emerging service requirements, the economic environment and government policies have created a great opportunity for the industry." the air chief said, adding: "If we succeed in establishing a firm foundation today, our aerospace capability would jump a generation ahead."

Accepting that it was difficult for industry to achieve core competencies in all spheres, Major urged Indian companies to identify emerging technologies and concentrate on developing them.

In his welcome address, Atul C. Kirloskar, chairman of the CII National Committee on Defence and Chairman & Managing Director, Kirloskar Oil Engines said while the new DPP was a favourable move for Indian industry to partner in the production and maintenance of defence weapon systems, the delay in the notification of the "Raksha Udyog Ratnas" was an "opportunity lost".

Air Marshal Gautam Nayyar, Air Officer Commanding-in Chief, Maintenance Command, told the participants that industry must keep in mind the IAF's stringent quality requirements and assured it of full support in evolving such standards.