Industry seeks sops to enter defense sector

Thursday, 12 September 2002, 19:30 IST
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NEW DELHI: India's leading business chamber Wednesday sought several sops to strengthen the presence of private companies in the defense production sector and called for a ban on importing all military hardware that could be indigenously produced. The Confederation of Indian Industry (CII) said the defense ministry should end the monopoly of state-owned defense production units and ordnance factories and ensure that the private sector too was allowed to produce hardware using imported technology. Only state-owned units like Hindustan Aeronautics Limited (HAL) and the Heavy Vehicles Factory are currently allowed to produce hardware using imported technology, including tanks and aircraft. India, which is currently the world's third largest buyer of arms, opened up the defense production sector to private participation this year but response to the move has been lackluster. Only six companies have so far obtained licenses to make defense equipment. Almost a third of India's defense outlay of 650 billion for the current fiscal has been allocated for purchasing new hardware, and attempts by the defense ministry to get the Indian private sector to play a greater role in manufacturing equipment needed by security forces have not taken off. New Delhi had set itself the target of acquiring 70 percent of its military hardware needs within the country by 2005, but experts say this is unlikely to be achieved. Addressing a business summit at which Defense Minister George Fernandes was present, Atul Kirloskar, chairman of CII's committee on defense, said the defense ministry should identify major equipment that could developed and made indigenously and stop their imports. He urged the government to make it mandatory for all foreign supplier of equipment to tie up with an Indian partner and to end the practice of giving customs exemptions to foreign suppliers. Kirloskar noted CII had submitted a white paper in July last year calling for the amalgamation of Indian industry in the planning and acquisition process of the defense ministry. Fernandes, in his speech, noted the need for synergy between industry, the armed forces and the Defense Research and Development Organization to speed up indigenous development of hi-tech hardware. He said some 160 Indian companies were involved in manufacturing components for the homegrown Light Combat Aircraft, but private industry could do more by organizing itself into consortiums to make major equipment. Such consortiums could help state-owned units like HAL to meet demands for the indigenously Advanced Light Helicopter (ALH). Despite growing interest from several countries in the helicopter, HAL could not manufacture it in adequate numbers due to the lack of an assembly line, he said. If private industry formed a consortium with HAL, the production of the helicopter could be speeded up. Limited numbers of the ALH entered service with the army, navy, air force and Coast Guard this year.
Source: IANS