The Hindu : National : Changes sought in defence purchase policy

Online edition of India's National Newspaper
Sunday, Dec 26, 2004

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National

Changes sought in defence purchase policy

By Our Special Correspondent

NEW DELHI, DEC. 25. A Parliamentary committee has expressed disquiet over government support to defence public sector undertakings and called for reforms that include a new purchase policy, financial support for futuristic projects and quick clearances for their export proposals.

Taking note of the surplus capacity in several units of a public sector undertaking specialising in products for the defence sector, the Parliamentary Committee of Public Undertakings (COPU) has asked the Government to make changes in the defence purchase policy so that when equipment is imported, it should be through the buy-and-make mode with transfer of technology instead of resorting to the "buy only mode."

"This (approach) will not only add to the product range but also help in providing long-term product support to the customers besides ensuring self-reliance," observed a COPU report following a study tour in Bharat Electronics Limited (BEL). The panel found that the company's five of out nine units had surplus capacity as they were not being loaded uniformly for want of orders. The committee felt that besides changing the purchase policy, the Government should instruct the defence forces, defence PSUs and other government customers to place additional orders on these manufacturing units.

Financial assistance

Noting BEL's significant role in meeting the armed forces' requirement for electronic and radar equipment, the committee asked the Government to provide financial assistance to enable the company establish new projects which will not only extend the product range but also benefit the defence services.

The panel identified four projects costing Rs. 675 crores which should be supported by the Government.

Another measure that would improve the bottom-line of defence PSUs was timely Government clearance to export proposals. "The Government should consider evolving a system by which fast clearance is given for products to be exported to countries where restriction of defence export applies." The committee also wanted the Government to make the "off set" clause more effective while finalising the purchases from different vendors or countries. It also suggested that the Government should consider offering financial support to countries, especially in the SAARC area, who are willing to buy defence equipment from Indian defence PSUs.

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