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“Now is the appropriate time to prepare and work for assisting the Indian private industry, particularly the small and medium enterprises to enhance its technical capability, by facilitating technology transfer through formation of joint ventures or co-production units, leading to strengthening of the defence industrial base in the country and increasing the country’s self-reliance in defence preparedness”. This was stated by the Defence Minister Shri Pranab Mukherjee in his inaugural address at the National Expo of Small, Agro and Rural Industries in New Delhi today.
Shri Mukherjee went on to say that by providing an environment of conducive policies and focused packages of supportive measures, this sector can be enabled to accelerate widely dispersed and sustainable development of this vast country of ours. The Defence Minister said that the Union Minister of Small Scale Industries and Agro & Rural Industries has introduced the first ever legislation for the development of small and medium enterprises in the Lok Sabha during the last Budget session and the Bill has been examined by the Parliamentary Standing Committee on Industry and the recommendations of the Committee are now before a Group of Ministers for consideration.
The Defence Minister outlined the fact that historically, defence production has been in the public sector since the days of the first Industrial Policy announced in 1948. As a result, a large infrastructure for Defence ordnance and equipment, consisting of 39 Ordnance Factories, eight Defence PSUs and 50 R&D Laboratories was created in the country, he said. Shri Mukherjee added that these institutions besides providing direct employment to over two lakh persons, they have also generated large-scale indirect employment through ancillaries and small and medium enterprises (SMEs), by outsourcing to the later the supply of raw materials, semi-finished products, parts and components. The Defence Minister informed the gathering that these establishments currently outsource their requirements! from the private sector to the extent of 20-25 per cent and out of the quantities so outsourced, one-fourth is met through the small scale sector.
Shri Mukherjee recalled that the Government announced a major policy initiative four years ago permitting private sector participation in the Defence Industry sector and guidelines were issued in 2002 to allow up to 100 per cent private sector participation in the Defence Industry sector with Foreign Direct Investment up to 26 per cent, subject to licensing in either case. Thus the private sector has been encouraged to become partners in manufacturing defence items including the advanced equipment and systems, instead of remaining mere suppliers he said.
Shri Pranab Mukherjee went on to say that indigenisation will lead to savings in costs and thus release funds for procurement, besides reducing the outflow of foreign exchange. With this goal in view, my Ministry constituted a high-level committee to review the defence procurement procedures and integrate the user, namely, the defence establishments and the industry the Defence Minister said. The committee has since submitted its report recently and made valuable recommendations which are being examined he said. An important part of these recommendations Shri Mukherjee said relates to measures for promoting the participation of Small and Medium Enterprises (SMEs) in Defence supplies. A large number of SMEs do not seem to be aware of the opportuni! ties and procurement requirements of Defence establishments therefore, there is a need to enhance the level of awareness among them and also provide them institutional support in tendering and winning contracts for defence supplies he said.
Shri Mukherjee added that the Ministry of Defence is currently examining policy adjustments so as to provide a level playing field to the domestic industry vis-à-vis foreign bidders in respect of contracts for defence supplies.
The Defence Minister said that the Small-scale manufacturing units have historically developed around Ordnance Factories and Defence PSUs. Large industries are increasingly relying on smaller units acting as vendors competing among themselves. The relationship between the buyer and the supplier develops primarily on considerations of complete reliability, flawless quality and competitive prices Shri Pranab Mukherjee said. It is being increasingly realised by the large units that their involvement in holistic development of smaller supplying units in areas of technology, quality, product design, etc. will serve their own long term commercial interest because the competitiveness of the large units in the global market is linked to the quality and price of components being supplied to them by the small manufacturers, he said. The Ministry of Small Scale Industries (SSI) is already implementing a major cluster development programme for SSI clusters spread all over the country to be in regular touch with the Ministry of Defence and chalk out the details of cluster development interventions around Ordnance Factories and Defence PSUs with active participation of the later the Defence Minister said.
ASR / RAJ
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