Pvt sector asked to go for high-end work in defence

The private sector suppliers of defence components and systems should go for high-end work, given the policy incentives by the Centre by way of creating a level-playing field and the $10-billion potential business from the offset policy, said Union minister of state for defence MM Pallam Raju.

Speaking after inaugurating the aerospace and defence division of Nucon Industries here on Thursday, he pegged the current level of private contribution to defence research and manufacturing at 30-40 per cent.

“Private sector participation, particularly of the SMEs, has been substantial in terms of supplying components. In future, they should, and most of them want to, extend their range to become integrators, that is, to put together the whole systems,” he said.

The offset policy, meant to strengthen indigenous industrial capabilities, requires that for capital acquisitions above Rs 300 crore, 30 per cent of it has to be sourced from within the country.

Currently, India imports 60-65 per cent of its defence needs. Raju said India's defence policy centred around self-reliance, and specifically to reverse the high dependence on imports.

In that direction, “India’s indigenous missile development programme has been successful. Now the challenge is to ramp up the numbers quickly. For this, we have to leverage the capabilities of the private sector,” he said.

Nucon Industries has invested Rs 15 crore in the new division and plans to be an integrator of aerospace systems. It would have all the critical facilities inhouse at its Balanagar premises while going for partnerships for supply chain management, said Hemant Jalan, managing director, Nucon Industries.

Emani Krishna, general manager of Bharat Dynamics Ltd, which manufactures missiles, said the need of the hour was business partnerships that can offer quality, timely delivery and after-sales service.

Other defence officials noted the trends in the sector, the major ones being increasing indigenisation of missiles and their joint development with other countries, like Brahmos with Russia. They advised private sector players not to amortise their investments over short term.