Aspirations India

By A Staff Reporter

A minimum of 15-20 per cent increase in defence outlays is in the offing for fiscal year 2010-11 from the Ministry of Finance over defence outlays earmarked for it in the Budget of 2009-10 in view of the Defence Ministry’s modernisation and acquisition drive.

This was disclosed recently by the Minister of State for Defence, Dr. M M Pallam Raju while inaugurating the ASSOCHAM organized International Conference on Indian Defence. The minister also categorically declared that the government is still reluctant to raise the FDI ceiling in defence sector from the existing 26 per cent to 49 per cent in view of the sensitivities involved in the defence sector.

He told ASSOCHAM members that despite repeated intense pressures on government and extensive lobbying from industry, the government was not at all considering any such proposal given the nature of defence production at this juncture.

Dr. Pallam Raju added that since revenue collection of the government has risen significantly during ongoing fiscal year, there is every possibility that the Ministry of Defence would be allocated 15 per cent -20 per cent more outlays for the next fiscal from the Ministry of Finance to support and fund its modernization and acquisition drive.

Since defence modernization is one of the top priorities of the government to equip its armed forces with the latest technologies, higher allocations are required and indications are there that in the Budget proposals for 2010-11, the finance minister will make an increase in the defence Budget between 15 and 20 per cent, clarified the minister.

Responding to a query on corporatisation of Ordnance factories, Dr Raju ruled out possibilities of their privatization, arguing that the workforce engaged in them have given their lifetime to such factories and the government cannot be apathetic to their lot.

He, however, added that in order to make them competitive, the government has stopped giving them certain tax benefits, rewarding sufficient autonomy to enable them compete and create a level-playing field so that the Indian private sector comes forward for defence production through the joint venture route.

On the issue of defence production policy, Dr. Raju indicated that the government is examining all pros and cons before it sets a time frame for the Defence Production Policy in which the provisions would be incorporated to seek indulgence of the Indian private sector for defence exports with bear minimum government approvals.

He admitted that in the absence of defence production policy, exports of defence articles, equipment, component and finished products are a little cumbersome but assured that something would be done in this front without giving a timeframe for it.

Mr. N S Sisodia, Director General, Institute for Defence Studies and Analyses (IDSA) called for a clear-cut roadmap for corporatisation of ordnance factories as he held that without it, Indian defence production will remain import oriented and that the ordnance factories and its workforce would not be geared to take on competition.

Dr. Vivek Lall, vice president and country head, Boeing Integrated Systems and Chairman ASSOCHAM Defence Committee sought few modifications in the existing Defence Offset Policy to make defence procurement simpler and realistic.

He also demanded a rise in the FDI ceiling in defence sector as it would help India absorb technologies and increase its defence production to help India move towards self-reliance if not self-sufficiency.

Among the others, who spoke on the occasion comprised Mr Kevin Thieneman, president Asia & Chairman, Caterpillar India and Vice Adml. (Retd) P C Bhasin, co-chairman ASSOCHAM Defence Committee.