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CII: Set up National Defence Manufacturing Commission

 
Against the backdrop of India emerging as the world's largest importer of arms, an industry lobby and a global consultancy have recommended the setting up of a National Defence Manufacturing Commission (NDMC) under the Prime Minister's Office (PMO) to focus on building a domestic industrial base to make the nation self-reliant in the sector.

A study by the Confederation of Indian Industry (CII) and Boston Consultancy Group (BCG) also proposes that the government allow 49 percent foreign direct investment (FDI) in select cases and revive the concept of defence industry champions or Raksha Udyog Ratnas (RURs) to encourage private participation in the defence sector.

Releasing the study, CII National Defence Council Chairman and HCL founder Ajai Chowdhary drew parallels to the Atomic Energy Commission and the Space Commission to seek the setting up of the NDMC so that the PMP could directly monitor India's defence manufacturing sector.

"RURs should be brought back in full form," Chowdhary said.

A Stockholm International Peace Research Institute (SIPRI) report in March had listed India as the top defence importer between 2007 and 2011. India imports 70 percent of its defence needs from the global market, and its indigenous content is about 30 percent.

The CII-BCG study, referring to India's USD100 billion likely spend on defence acquisitions over the next decade, said that there is an urgent need to leverage the buying clout while negotiating with global original equipment manufacturers to bring in technologies to the domestic market.

The study said the NDMC should focus on progressively increasing domestic procurement from the present 30 percent to 75 percent in 10 years, ensure that the 10 large defence programmes of the country source a large percentage of their requirements from the local market, build local intellectual property, enable creation of one million direct and indirect jobs in the country, and monitor implementation of the government's defence industry policies.

It also wanted the government to pass an executive order to make it mandatory for large defence flagship programmes to use the 'make/buy and make' provisions of the defence procurement procedures so that local industrial capabilities are built through those projects.

The industries want access to critical technologies available with research agencies or obtained through technology transfers. They wish to build their own capabilities to meet domestic military requirements.

CII National Defence Council Co-chairman Satish K Kaura said: "Most industry bodies of the country have not agreed that 49 percent FDI should be allowed on a case-to-case basis, but it should be permitted with mandatory technology transfers and not just licensed production norms."

For all these to proceed without much hindrance, the study suggested that the government create enabling infrastructure.