Antony Cautions Defence PSUs Against Over-Dependence on Imports (excerpt)
(Source: Press Information Bureau India; issued November 7, 2008)
Following is the extract of the speech delivered by [Indian Minister of Defence] Shri A K Antony during the presentation of “Defence Minister’s Awards for Excellence for the year 2006-07 to Ordnance Factories and Defence PSUs”, here today:


“I am indeed glad to be present at this presentation ceremony of ‘Awards of Excellence’. These awards were instituted to infuse a competitive spirit among the Defence Public Sector Undertakings and Ordnance Factories and help them in their pursuit of excellence. I take this opportunity to congratulate the winning Defence PSUs and Ordnance Factories for winning these awards for 2006-07.

The Department of Defence Production deals with the development, production and exports of defence equipment – both in the public and private sector. Our combined endeavour is to optimise indigenisation and achieve self-reliance to the extent possible.

The Department has eight Defence PSUs and 39 Ordnance Factories with a wide ranging production infrastructure. The list of products ranges from aircrafts to helicopters, warships, submarines, heavy vehicles and earthmovers, missiles, electronic devices and components for the defence sector, as well as alloys and special purpose steel.

We have taken several initiatives in our efforts to achieve self-reliance. These include – Transfer of Technology (ToT) from DRDO, design and development by DPSUs and tapping the capabilities of private sector through joint ventures in different fields. HAL has core competence in aircraft and avionics, BEL specialises in communication and electronics, BEML’s expertise lies in heavy engineering and Bharat Dynamics Ltd’s competence lies in the field of missiles.

HAL has created a new Helicopter Division to meet the requirement of services as well as civilian customers. A major proposal of Design and Development of Light Utility Helicopter by HAL is under the consideration of our Government. This step will provide a big thrust to the indigenous Design and Development programmes.

All the three shipyards under the Ministry of Defence are moving fast ahead with their state-of-the-art modernisation programmes. This is imperative if our shipyards are to keep pace with the global shipbuilding technologies and are to effectively meet the challenges of warship building in the future. Similarly, Mishra Dhatu Nigam Limited (MIDHANI) has also embarked upon a modernisation programme to upgrade its existing facilities to enhance production. MIDHANI is a critical and strategic Defence PSU, as it manufactures special metals and super alloys. These products form the backbone of the space, missile and nuclear programme of our country.

The Ordnance Factories Organisation is the largest and the oldest departmentally run production organisation in our country. It is mainly engaged in the manufacture of defence hardware for our Armed Forces. The Ordnance Factories were established with a mandate to achieve and ensure self-reliance in manufacture of defence hardware, a role that has been successfully fulfilled all these years through the continuous expansion of manufacturing base and upgradation of technology.

The new Defence Procurement Policy (DPP-2008) and offset guidelines have been issued recently. The revised guidelines require the private industry to have an industrial licence only if so stipulated under the guidelines/licensing requirements for the defence industry issued by the Department of Industrial Policy and Promotion.

The offset policy has been revised to include offset credit banking, enabling foreign vendors to create offset programmes in anticipation of future obligations. A list of defence products has been added to facilitate the foreign vendors in implementing their offset obligations. This should encourage formation of Joint Ventures, Foreign Direct Investment and strengthen our defence industrial capability in a big way. Our effort is to provide a level playing field to the DPSUs/OFs, as well as the private sector to forge such alliance with OEMs.

I am pleased to announce that the DPSUs and OFBs have achieved value of production almost to the tune of Rs. 29,000 crore in the last financial year. Our DPSUs and OFs have achieved indigenisation to the extent of 60% and 90% respectively. The value addition too has been around 40-45%, which makes our products cost effective.

In my experience since I have been part of the Ministry of Defence, I would like to give you a word of caution and advice on this occasion. Heavy over-dependence on foreign suppliers can create problems in times of crisis. Unless modernisation takes place, management techniques change for the better, plans are updated, we induct more technology, there will be delays in delivery, our plans will be already outdated by the time we implement them. We are importing as much as 70 percent of our defence equipment. No other major power in the world does this. We are among the top ten leading economies in the world. But the import of such large proportion of defence equipment can one day create problems for us.

At times foreign suppliers can dictate terms. We should achieve self-reliance to the optimum.

The earlier the better we remove this overdependence. There is a need to modernise plants, update technology and cut delay in deliveries.

Before concluding I would once again like to congratulate the Defence PSUs and Ordnance Factories for their dedicated and sincere efforts in making our country self-reliant in the defence sector. However, constant endeavours in the same direction are the need of the hour.

We need to optimise the synergy levels between the public and the private sector to create a comparative defence technology edge and strengthen the defence industrial base of our country.”

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