NEW DELHI: Defence Minister Pranab Mukherjee on Wednesday expressed confidence that the Government would be able to spend a whopping Rs. 34,375 crores earmarked for capital acquisitions. Addressing a FICCI seminar on "Public-Private Partnership" here, Mr. Mukherjee said there was a provision of Rs. 83,000 crores in the current year's defence budget with expenditure on capital acquisitions pegged at Rs. 34,375 crores. A significant portion of this allocation would be spent on imports.

The assertion of the Defence Minister is rather significant given the fact that Cabinet Committee on Security (CCS) is yet to clear the multi-billion dollar deals for acquisition of six Scorpene submarines and low-level transportable radars from France. The NDA Government had cleared these deals. The defence deals cleared by the erstwhile NDA Government were said to be under review. Though he conceded that domestic private participation in defence procurement had not taken off as expected, the Defence Minister said the trend should be reversed by giving the defence industry, both private and public, a major role in indigenisation of the imported products.

Pointing out that even a 10-20 per cent reduction in imports would not only help in saving precious foreign exchange but also have a spiralling effect on the economy, Mr. Mukherjee said this would increase growth rate in the manufacturing sector and create job opportunities not only in large industries but also in small scale ancillary industries supporting the manufacturing sector.

Private participation

Mr. Mukherjee said private sector participation and FDI in defence procurement had already been allowed in 2001. He, however, admitted that there were certain irritants and the Government was looking into them.

"India needs to become self-reliant in defence production to effectively meet the fast-changing ground realities of defence operations," he said, while emphasising the need for encouraging sustenance of the domestic defence production industry by reaping the benefits arising out of exporting products.

He favoured devising of an effective strategy for exports and to target niche markets where India would have a competitive advantage.

Noting the role of private players in the supply of raw materials, Mr. Mukherjee said: "India is going through an epochal transformation and is emerging as a formidable economic and political power."

Pointing out that the Government had accepted in principle to have an Offset Policy to leverage India's position as a large buyer, he said the Department of Defence Production was in the process of finalising modalities for introduction of a specific clause on "Offsets."

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