India to promote private participation in defence purchases
December 19th, 2009 - 8:10 pm ICT by IANS ( Leave a comment )Kolkata, Dec 19 (IANS) The government is trying to help private companies bid for defence deals through its offsets procedure, Minister of State for Defence M.M. Pallam Raju said here Saturday.
The offsets procedure, part of the Defence Procurement Policy (DPP) aims at promoting private sector participation in defence equipment manufacturing and makes it compulsory to source 30 percent of all defence import deals above Rs.300 crore to domestic firms.
“There’s a tremendous potential of offset opportunities in the next five years. The expenditure for purchasing defence equipment during the 11th Five-Year Plan period is estimated to be around $30 billion,” Pallam Raju said.
“At least 30 percent of this, which comes at $10 billion (about Rs.45,000 crore), will have to be sourced from within India during this period as part of the offsets policy,” Raju said at a seminar organised by the Confederation of Indian Industries (CII).
The government currently procures defence equipment from various indigenous and foreign sources.
The offsets are intended to promote defence industrial capability through transfer of technology, increased investment in research and development activities and licensed production by involving private investments.
“Till date contracts worth more than Rs.8,000 crore have been signed. The share of engineering services is about 18 percent and it has a lot of scopes to rise further,” the minister said.
“Companies in all segments of the aerospace and defence industry must strengthen their ability to increase productivity to meet customer demands as well as economic and
regulatory requirements.”
Raju said there were anomalies in the defence procurement policy that deter private investors from entering the space, adding that the DPP was aimed at bringing in transparency in the process.
“I assure you we are cognizant of the concerns and will once again continue to address these issues. Our objective is to develop a strong, vibrant modern and advanced defence production industry in the country within the shortest possible time.”
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