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India's defence import to be dlrs 30 billion by 2012: Report

IRNA - Islamic Republic News Agency

New Delhi, Dec 22, IRNA
India-Defence-Import
India's imports of military hardware and software are expected to reach a whooping ceiling of dlrs 30 billion by 2012 as its armed forces comprising army, airforce and defence are expected to ink defence deals for multi role fighter jets, 1.55mm howitzers, a variety of copters and long range maritime spy aircraft.

The aforesaid projections have been made in a Paper on `Avenues for Private Sector Participation in Defence' by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), emphasizing that in the past 3 years, India spent as much as dlrs 10.5 billion of military hardware and software, making it the largest arms importers in the developing world.

The Paper highlights that with ever increasing demand for higher allocation to defence budgets and limited capacity of the government to meet this demand, the defence sector requires a re-look to procure its goods and services from existing allocations in a more efficient manner.

Referring to Defence budget, ASSOCHAM President, Venugopal N Dhoot says that Indian military budget was about dlrs 20 billion in last fiscal and is expected to grow 7 percent annually over next 5 years.

The country's military spend amounts to roughly 2 percent of GDP which is without accounting for expenditure on defence pensions, para military forces and defence ministry itself as part of budgeted defence expenditure.

The Paper seeks larger private sector participation in all defence related deals and imports, reminding the government that despite Defence Ministry's targets of achieving 70 percent self reliance in defence production 10 years ago, it has fallen short of the target by 40 percent as till now only 30 percent defence production has become self reliance. This is despite the limited involvement of private sector was granted in national defence sector. The year 2001 witnessed the first step in this regard as the entry of foreign private players was permitted with 26 percent FDI being allowed in the sector.

By mid of 2007, there were about 5200 companies supplying around 20-25 percent of components and sub assemblies to state owned contractors in the defence sector, said Dhoot commenting on findings of Paper.

Some of key non Public Sector Undertakings (PSU) industry participants supplying defence equipment and services include Mahindra and Mahindra, Tata Group, Kirloskar Bros., Larsen & Toubro, Ashok Leyland, Jindal, Max Aerospace & Aviation and Ramoss India.

India's defence imports, the projections for which have been made for dlrs 30 billion by 2012 could be made cost effective by introducing competitive bidding process for supplies of defence needs for its forces.

The current process seeks private companies to develop only prototypes of equipment as a result defence public sector undertakings obtain orders on nomination basis which effectively closes the doors on private companies. The Paper, therefore, suggests that if private capabilities have to be leveraged, then competitive bidding should become the norm.

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