Growth of Private Defence Industry Encouraging, says Secretary Defence Production
(Source: Press Information Bureau of India; issued February 15, 2010)
Following is the text of the address delivered by Secretary (Defence Production) Shri Raj Kumar Singh at the inauguration of the 6th Def Expo 2010, here today:

It gives me immense pleasure to welcome you all to this Land and Naval Systems Exposition – DefExpo 2010. This is the 6th edition of DefExpo, which is being organized by the Department of Defence Production, Ministry of Defence, Government of India.

Over the years, this Land and Naval Systems Exposition has been on the path of sustained growth with your active support and participation. The event, which is organized biennially, has carved a niche for itself internally, as its showcases the latest technologies and products produced in India [and] provides a window for leading defence manufacturers and players from across the world to display their latest technologies and products.

DefExpo 2010 has received tremendous response from domestic as well as international companies. We are delighted that with every edition, Defexpo has been larger and better attended. Over 650 companies, both domestic and internal, are participating in DefExpo 2010 as compared to about 450 during DefExpo 2008. We are honoured by the gracious presence of over 41 official delegations including 14 ministerial delegations from across the world in this event. The space booked by both domestic and international companies in this year’s event is over 30,000 Sq Mtrs as against 17,000 Sq Mtrs in the last event.

We have made special arrangements in this year’s even for Business to Business (B2B) meetings to provide maximum business opportunities to the participants. These B2B meetings will be held during all exhibition days. Over 50,000 business visitors are expected to attend the DefExpo 2010 during the four days of business interaction.

The Indian Industry today is ready to assume greater responsibility in making the country self-sufficient in defence production. The resurgence of Indian manufacturing sector has been impressive. Not only are Indian companies growing within the country, but are also expanding abroad and many Indian firms are becoming transnational companies.

The Indian manufacturing sector is now internationally competitive with highest quality standards, efficiency and manufacturing facilities. India is also fast developing into a manufacturing hub for world corporations eager to leverage this sector’s proven skills in product design, configuration and customization with creativity, assured quality and value addition.

Since 2001, the Defence Industry sector in India is open to 100 % Indian private sector participation with foreign direct investment permissible up to 26 %. The Indian Defence Industry in the private sector is now gradually assuming the role of system integrator and manufacturer of complete defence equipment and systems. This is a major shift in the role of private sector in India from its earlier supporting role to the public sector by supplying raw materials and components, sub-systems etc.

Indigenisation in defence production is now one of the major thrust areas of the Government. Consequently, our efforts are now directed towards reduction of defence imports and promoting indigenization in defence production sector with the active support of the Indian Defence Industry, both in the public as well as in the private sector. Various steps have been taken in this direction.

The recent introduction of “buy and Make (Indian)” category in the defence acquisition process has been designed to enhance participation by the Indian industry, meeting our requirements for state of the art defence systems and platforms by getting into tie ups with technology providers through mechanism of technology transfers in joint ventures. This is a major step which has been taken by the Government as a result of the review of Defence Procurement Procedures.

In capital acquisition cases categorised as “Buy and Make (Indian)”, the Request for Proposal will be issued to those Indian industries that have requisite financial and technical capabilities to enter into Joint Ventures, as also absorb technology and undertake indigenous manufacture. The procedure to be followed in this regard will be akin to the existing “Make” procedure with a difference that the production and development by the Indian industry will be through Transfer of Technology and not through Research and Development.

I would urge the companies present here to use this opportunity to pursue tie-ups and joint ventures as “Buy Indian”; “Buy and Make Indian”; and “Make” will be the preferred categories with option of “Buy Global” being resorted to only where equipment with requisite Qualitative Requirements are not possible to be procured through these methods in the required time frame.

Seminars on various topical subjects including this subject are being organized by the Indian Industry Associations during this event, I would request the participants to attend these seminars and seek clarifications, if any required, from the officers who would be attending these seminars.

Consequent to the introduction of Defence Offset Policy, defence offset contracts valued over Rs. 8000 crores have so far been signed and many more are in the pipeline. As a result of periodic review of Defence Procurement Procedures, changes have also been introduced in the Defence Offset Policy. Banking of offsets credits is now permissible.

The realization of offsets benefits will now be speedier as the policy offset banking will allow the Indian industry to start offsets even before finalizing of contract with foreign OEMs. This will also enable foreign vendors to create offset programme in anticipation of future obligations. In exceptional cases, change in offset partner may now be permitted by the Ministry on being convinced that the change is desirable to enable the vendor to fulfill offsets obligations.

India is a growing market and emerging as a strong economy. With the projected growth of the Indian economy, its defence needs are also correspondingly growing. India, therefore, offers excellent opportunities, both for domestic as well as foreign companies, to forge new alliances and partnerships in the form of joint venture, co-production and co-development arrangements in the Defence sector.

In the context of the ongoing modernisaiton of the Armed Forces and the acquisition reforms undertaken by the Government, the Indian defence market now offers tremendous opportunities for formation of joint ventures and direct sourcing by the global players. India needs highly sophisticated and technologically advanced products to meet the requirements of the Armed Forces. We are also looking for collaborations in the field of Defence R&D and tie-ups in critical technology areas in order to meet the requirements of the Armed Forces through indigenous sources to the extent possible.

DefExpo 2010 promises to showcase India’s emergence as an attractive destination for investment in the defence sector. The Introduction of structured Business to Business meetings and exhibitors press conference, over and above product launches being introduced for the first time in the show would maximize business opportunities for the participants. I would like to urge upon the companies and participants to make full use of the opportunities available during the show.

To conclude, I once again extend a very warm welcome to all our distinguished exhibitors and participants in DefExpo 2010 and wish them all success. (ends)

Atmosphere Conducive for Investment in Defence R&D: Pallam Raju
(Source: Press Information Bureau of India; issued February 15, 2010)
Following is the text of the address delivered by Minister of State for Defence Dr. MM Pallam Raju at the inauguration of the 6th Def Expo 2010, here today:

It is indeed a pleasure for me to be here at the Inaugural Ceremony and to welcome this year again the participants of the Indian 6th Land and Naval Systems Exposition – DefExpo 2010 which is biennially organised by the Ministry of Defence, Government of India.

Secretary (DP) has already dwelt at length on the arrangements made during the event and apprised you about its salient features. Without going into the logistics of the events, I would like to focus on some of the policy initiatives that have been taken by the Government in the recent past in the Defence Sector.

Under the able guidance of the Defence Minister, while the Government is clear about providing our Armed Forces with the best and the state–of–the art systems equipment and weapons, the policy also aims at achieving a high level of indigenisation in defence related production in the years to come.

Government has been periodically reviewing the Defence Procurement Procedures with a view to lend greater transparency and impartiality as well as to speed up the acquisition process. The last such review has been undertaken recently, as a result of which amendments to the Defence Procurement Procedure 2008 – effective from November 2009 have been introduced.

The major focus of introduction of the amendments to the procedures is also towards developing a sustainable defence industry in India which is ready to meet the requirement of the Indian Armed Forces. The introduction of the new category of acquisition “Buy and Make (Indian)” is a major shift which will allow Indian industries to enter into joint ventures with foreign OEMs. The route will open ways for technology transfer to Indian industry based on the requirements of the Armed Forces.

One of the major impediments in the growth of the defence industry in India has been lack of information regarding the defence requirements. A public version of the perspective documents outlining the perspective and capability road map of the Armed Forces covering a period of 15 years will be published and placed on the MoD website. This would enable the domestic industry to plan investments in the defence sector and take up Research and Development, technology upgradation and tie up collaboration with associated foreign industry partners in order to meet the future requirements of the Forces.

Another important facet of the recently introduced amendments in the Defence Procurement Procedures is that the issue of Request for Information has now been made mandatory for all acquisition cases. This will not only provide the information necessary for formulation of General Staff Qualitative Requirements, but also act as advance intimation to the industry.

This, along with the sharing of the public version of long term acquisition plan of the Armed Forces, would help the Indian industry to work out the technological requirements, build up expertise, manufacturing capabilities, and plan joint ventures or co- production arrangements with foreign firms in order to meet the future needs of our Armed Forces.

In order to promote indigenisation in Defence Production, greater synergy is required between the defence industry in the public and the private sector. There is also a need to pay more attention to R&D in defence and attract scientists and research scholars to this field. The Government is ready to invest more money in the research and development and will not allow the R&D in defence to suffer for lack of expenditure.

As a result of the steps that have been taken by the Government in the recent past to reform the Indian Defence Sector, the atmosphere in India is now conducive for attracting more and more investment in Defence R&D. We are looking for partnerships and co-development arrangements and formation of joint ventures in the critical technology areas.

DefExpo, which is a one stop shop, is an ideal platform for doing business in defence. The unprecedented growth, which this event has witnessed over the years, underlines its importance, which is further enhanced considering the size of the defence market in India.

I am confident that the DefExpo 2010 will be rewarding experience for all the exhibitors and participants and provide ample business opportunities in the defence sector. I wish the event a grand success.


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