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Wednesday, Apr 06, 2005

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Kelkar panel for reviewing ban on defence exports

By Our Special Correspondent

NEW DELHI, APRIL 5. The Kelkar Committee on defence purchases has suggested a review of the negative list on defence exports along with a long-term policy regime to encourage the best among the Indian companies to make defence equipment and become steady suppliers of equipment to the armed forces.

The committee chairman, Vijay Kelkar, submitted the first part of the report — "towards strengthening self-reliance in defence preparedness" — to the Defence Minister, Pranab Mukherjee, here today.

The report asked the Government to pare down the ban on the export of several defence items so that companies do not remain solely dependent on the Indian armed forces for orders. It feels an "off-set" clause should be incorporated in all defence imports over Rs. 300 crores in value. This would mean the supplier company will be obliged to import some Indian goods in return for exporting defence equipment to the Indian armed forces. Several high value defence contracts signed recently did not have an "off-set" clause that would have opened fresh markets for even non-defence companies.

Long-term plan

The main recommendation on a new policy regime suggests the formulation of a 15-year long-term purchase plan and identification of the entry points for the private sector in the acquisition process with special care to promote small and medium companies. The Kelkar panel also suggested setting up two "professional" organisations to promote exports and make purchases. It favours industry being allowed to collaborate with the Defence Research and Development Organisation.

The committee suggested a strategy to implement its recommendations, along with a time schedule. It carried out an impact analysis of the suggestions and concluded that implementation would deepen the Indian defence sector and step up economic growth and employment besides resulting in greater self-reliance, technology spin-offs and cost savings.

The report was confident of the Indian industry's capability to make and supply defence items and recommended tie-ups among all the players in the defence sector — the private industry, public sector undertakings, ordnance factories and the DRDO — to promote high technology capabilities and create an environment for a jump in export of defence equipment and services.

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