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Defence industry commission under PMO proposed

delhi Updated: Apr 02, 2012 18:14 IST
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Against the backdrop of India emerging as the world's largest importer of arms, an industry lobby and a global consultancy on Monday recommended the setting up of a National Defence Manufacturing Commission (NDMC) under the Prime Minister's Office (PMO) to focus on building a domestic industrial base to make the nation self-reliant in the sector.

This can create at least one million direct and indirect jobs in the defence sector within India, the study, "Creating a Vibrant Domestic Defence Manufacturing Sector, released on Monday said.

The Confederation of Indian Industry (CII) and Boston Consultancy Group (BCG) study also proposed that the government allow 49% foreign direct investment (FDI) in select cases and revive the concept of defence industry champions or Raksha Udyog Ratnas (RURs) to encourage private participation in the defence sector.

At the release event, CII national defence council chairman and HCL founder Ajai Chowdhary drew parallels to the Atomic Energy Commission and the Space Commission to seek the setting up of the NDMC so that the PMO could directly monitor India's defence manufacturing sector.

"Raksha Udyog Ratnas should be brought back in full form," Chowdhary said.

A Stockholm International Peace Research Institute (SIPRI) report in March had listed India as the top defence importer between 2007 and 2011. India imports 70% of its defence needs from the global market and its indigenous content is about 30%.

The CII-BCG study, referring to India's $100 billion likely spend on defence acquisitions over the next decade, said there is urgent need to leverage the buying clout while negotiating with global original equipment manufacturers to bring in technologies to the domestic market.

The study said the NDMC should focus on progressively increasing domestic procurement from the present 30% to 75% in 10 years, ensure the 10 large defence programmes of the country source a large percentage of their requirements from the local market, build local intellectual property, and monitor implementation of the government's defence industry policies.

"NDMC and its mandate would enable creation of one million direct and indirect jobs within the country. Otherwise, the 70% defence imports -- amounting to $70 billion in a decade -- will create jobs in US, Europe and other nations.

"We want India to use its clout as a major arms buyer to bring defence manufacturing to India and to bring these jobs to India. This is what is required to be done," Chowdhary said.

The sstudy also wanted the government to pass an executive order making it mandatory for large defence flagship programmes to use the 'make/buy and make' provisions of the defence procurement procedures so that local industrial capabilities are built through those projects.

The industries want access to critical technologies available with research agencies or obtained through technology transfers they build their own capabilities to meet domestic military requirements.

CII national defence council co-chairman Satish K Kaura said: "Most industry bodies of the country have now agreed that 49% FDI should be allowed on a case-to-case basis, but it should be permitted with mandatory technology transfers and not just licenced production norms."

For all these to proceed without much hindrance, the study suggested that the government create enabling infrastructure.