Defence offensive IIFL Online Trading A/c - Currency, Shares, Mutual Funds & Commodity Trading in 1 A/c. Sign Up ndiainfoline.com/All-in-1-Trading weeping reforms are needed if India is to become a global defence manufacturing hub. A piecemeal approach won’t work Prime Minister Narendra Modi has set a tough challenge for India’s defence manufacturing sector — doubling its utput and halving defence imports in five years. With a budgeted expenditure of ₹2,29,000 crore in 2014-15, India is ne of the top ten countries in the world in terms of defence spends. China spends three times as much as India on efence — but imports only a third as much as India. Although 40 per cent of India’s defence spend is on the capital ccount, 70 per cent of the capital equipment it buys is sourced abroad. This is why India has emerged as the largest rms importer in the world, a title the Prime Minister has rightly said it has no desire to hold. But changing this is not asy. It requires not just policy reforms, but a radical change in approach on the part of the government. Piecemeal fforts, like hiking FDI limits in defence or removing a few tax issues, while welcome, will not be sufficient. India’s focus has been on indigenisation and development of local capability, which has led to the creation of a huge efence research and development infrastructure. While this has scored a few successes, a senior DRDO official’s claim hat India has reached “maturity” in defence technology is belied by the string of failures and the huge delays and cost verruns dogging key projects, ranging from the Main Battle Tank to the Light Combat Aircraft to even small arms. his needs radical reform, including close integration of the end users — the armed forces — with the civilian evelopment effort. These institutions have to be unshackled and allowed the freedom to recruit the best talent, while eing held to tighter outcome norms. While Modi has said the approach will be to look at “national capacity” rather han private or public sector, the existing PSU defence manufacturing set-up needs to be thoroughly revamped. It’s not nough to merely insist on technology transfer — the capacity to absorb and develop on it has to be built up as well. Foreign companies looking to set up manufacturing in India would also need skilled manpower, which would require evamping our technical education set-up. When Singapore pitched for a slice of the aviation manufacturing pie, for nstance, it introduced new courses in its technical education curriculum and created a new vocational training stablishment to ensure that hi-tech manufacturers were able to source appropriately skilled workers. India’s defence procurement process is cumbersome, opaque and has been dogged by corruption and controversy. The Prime Minister has promised “simplicity, accountability and speedy decision-making” in defence procurement. The last as been hampered by what Anil Ambani has termed “fear of regulatory censure”, which has paralysed decision- aking. To empower decision-makers, the government should consider amending restrictive provisions such as Section 13(1)(d) of the Prevention of Corruption Act, by which a public servant can be accused of corruption simply ecause a decision has led to pecuniary advantage for someone, even if no bribes had been paid. This article was published on February 19, 2015) Printable version | Feb 20, 2015 2:03:36 AM | http://www.thehindubusinessline.com/opinion/editorial/defence-offensive/article6913385.ece © The Hindu Business Line
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