26 August :Following are the extracts from the address delivered by the Defence Minister Shri AK Antony at the inauguration of the ‘INDAIR-08: Strategic partnering of IAF and Industry on Modernisation and Indigenisation’ seminar held in New Delhi today.
India is increasingly seen to be a nation with significant strategic influence on world affairs due to economic reforms initiated in early nineties. While the commercial clout of "India Inc" has been the more visible component, the unstated role played by the armed forces in ensuring that our nation is viewed as a strong and stable country, has been equally important in achieving the present status. As the fourth largest Air Force in the world, the Indian Air Force has been a key player in these exciting times and provides the much needed "strategic reach" necessary to make impact on global decision.
In order to achieve the national aim, the IAF has embarked on ambitious induction and upgradation programs. On effective implementation, these programs will provide an opportunity for the industry to enter into a profitable and mutually beneficial partnership with the armed forces. The advantages in having reliable indigenous private enterprises capable of delivering cutting edge technology products and services for the armed forces are well understood. This in fact could be the key difference between developing and developed nations in times to come.
India has always been focused and our objective has been to be self-reliant in defence production and services. What has changed, and changed significantly in the recent past has been the methodology adopted to achieve this indigenous capability. While public sector enterprises like Defence Research establishment, PSUs and Ordnance Factories have and will continue to play a meaningful role in this endeavour, the Government of India, has in the recent past introduced a number of measures which provide the industry an incentive to partner with the armed forces in their march towards self reliance. This is due to the maturity and enhanced technological capability of our industry. These initiatives include opening of the defence industry for up to 100% private sector partnership, transfer of defence related items from the reserved to the licensed category, issuance of detailed guidelines for the grant of industrial license by the Dept of Industrial Policy & Promotion (DIPP) and dispensing with separate licensing by MoD.
Since the point has been raised in this forum I feel obliged to clarify here that it is a wrong perception that the announcement on the RURs has been delayed by the government due to pressure of the Trade Unions. True, the trade unions, whether those be the Left-affiliated, why even those backed by Congress or other parties, all of them are apprehensive of the RURs. But that is not the reason why the naming of RURs is delayed. This is delayed because a section of the Large and Medium Industry, particularly the electronics sector, are opposed to some of the Guidelines for the naming of the Raksha Utpadan Ratnas. So it is not only the trade unions but the industry itself that is resisting the RURs. But the government is committed to partnering with the industry and let me assure you all here that very soon a revised Defence Procurement Manual would be released, work is going on to incorporate amendments based on interface with the industry.
These policy changes have resulted in a paradigm shift in the role of private sector in the field of indigenisation from the role of supplier of raw materials, components and sub-systems, to partners in the manufacture of complete advanced systems and equipment. Many large industries are showing definite inclination to invest both in R&D and infrastructure to develop capabilities in defence production to assume the role of system integrators. We welcome such initiatives of the industry.
The "Offset Policy" which mandates foreign defence vendors to source 30 to 50 per cent of contract value with India, is an example of the Indian Government’s resolve in providing the much needed incentive to the Indian Industry and a fillip to the goal of achieving "self-reliance". The Ministry of Defence has established a ‘Defence Offset Facilitation Agency’ (DOFA) under the DDP as a single window agency to provide guidance on implementation of this policy. I urge the industry to fully exploit this opportunity.
The key to the success of any partnership is "mutual respect, trust and transparency". I would be failing in my duty if I do not highlight some of the areas which past experience has shown to be possible points of contention. These are inaccurate projections, lack of facilities to undertake prototype tests, lack of adherence to time schedules, not meeting contracted delivery dates and abrupt stoppage of indigenisation activities. Similarly from the vendors’ perspective, areas of concern have been low Minimum Order Quantity, changes in specification, lack of guaranteed repeat orders and long lead times in the submission of prototype and bulk production clearance.
These issues must therefore be addressed in this forum and the process taken forward with an open mind for the mutual benefit of both sides. Initiatives like "INDAIR-2008" would act as enablers in resolving such issues. Such interactions also provide an excellent opportunity to understand the perspective of the industry as well as armed forces and help take forward the partnership.