1. Manohar Parrikar for simpler defence procurement procedure

Manohar Parrikar for simpler defence procurement procedure

SMEs’ participation in Make in India for categories which are of smaller size is absolutely essential.

By: | Bengaluru | Published: February 20, 2015 2:28 AM

Defence minister Manohar Parrikar on Thursday asserted that the existing guidelines for the defence sector should be implemented with efficacy, instead of ushering in changes in the present set of norms. The minister also admitted that the defence procurement procedure should be more friendly and a time frame for projects should be adhered to, with any deviations being “exception” driven.

Parrikar said the sector is facing problems regarding timeline and defence offset policies, particularly flexibility in selecting a partner, and absence of a proper grievance redressal mechanism. He advocated bigger participation from small and medium industries for the Make in India initiative. “SMEs can be brought in as a partner in Make in India. The concept, as it stands today, talks only about platform. The big equipment definitely has to be there. But, there can also be an identified list of items which we need to develop in India, whether through technology transfer or research and development. The SMEs’ participation in Make in India for categories which are of smaller size is absolutely essential,” Parrikar said at an interactive session organised by the Confederation of Indian Industries in Bangalore.

The present offset rules mandate that any foreign company which wins a defence contract of over $60 million should spend at least 30% of the total value of the contract to procure services and supplies from Indian companies. While the offset requirement in India is 30% of the contract value, the global average is about 60% while in some European Union countries, it is as high as 100%. “We had enough interactions, had enough data and as I see, probably 80-90% of the problems are understood. It is high time the valuable inputs are put into operation. If I don’t put them into operation in four to eight weeks, I will feel uncomfortable as I actually like to deliver,” he added.

CII national committee chairman Baba Kalyani said though offsets do not bring large economic benefits, they are catalysts to kickstart defence manufacturing. “Offsets are means to develop partnerships. However, in the long run, offsets are not going to help the industry to survive, it has to survive on its own merits and competencies. In an Indian situation, offset is particularly important since we are in the early stages of the process of developing and implementing programmes,” said Kalyani, chairman of Bharat Forge.

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