At least 13 major Indian private companies are set to get historic special privileges to manufacture complex military systems.
13 Indian firms get historic defence production privilege
NEW DELHI: At least 13 major Indian private companies are set to get historic special privileges to manufacture complex military systems as the country prepares to engage its booming private industry in the defence sector. The plan will end the monopoly of state-run ordnance factories.
Reliable sources told DNA that a committee headed by Prabir Sengupta, a former commerce secretary, has selected the companies that will qualify as Raksha Udyog Ratnas (RUR). For all practical purposes, the RURs would enjoy the same status as the Defence Public Sector Units.
The companies will be able to take advantage of foreign technology and collaboration, and will enjoy cheaper imports. The firms can bid at par with the defence PSUs for manufacturing military systems.
The dominance and incompetence of defence PSUs, and the inadequacies of the Defence Research and Development Organisation, pushed India into becoming a major importer of defence items. Several estimates suggest that India is the world’s biggest defence importer.
For 2007-08, the capital outlay in defence budget is Rs41,922 crore, and defence purchases worth several times that amount are in the pipeline.
Sources said that June 6 has been tentatively settled as the date for the Sengupta Committee to submit its report on RURs to Defence Minister AK Antony. The RUR concept, and a proposal to create a Defence Technology Development Fund, will transform India's defence procurement processes, a senior ministry official said. The fund, speculated to hold an initial corpus of Rs100 crore, envisages the government providing an advance of up to 80 per cent of funding to private companies for development of critical weapon systems. The fund's creation is to be announced some time later this year.
As for the RURs, they would become system integrators of complex military equipment, and would systematically help in increasing defence purchases from within India. According to sources apprised of the constitution of the RURs, the chosen few include Larsen & Toubro, Mahindra and Mahindra, and Tata Motors.
The companies meet the criteria laid out by the government. All the companies have had an annual turnover of over Rs1,000 crore for the past three years, already hold licences for defence manufacturing, and have been listed in Indian stock markets for a decade. Further, none of the companies has more than 26 per cent foreign direct investment. Forty-one Indian companies had applied for the RUR status.
In the past, except in a few cases such as vehicles, the private sector has had no significant role in defence manufacturing.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}