Defence exports have dropped to 'laughable level'

Defence exports from the country's Ordnance Factories have fallen to such meagre levels that the quantum is "laughable", a former Army General has said.

Defence exports from Ordnance Factories have slided from "a paltry Rs 41.07 crore in 2008-09 to a laughable Rs 12.28 crore in 2009-10. It is a reflection of the nature and quality of items being produced indigenously," Maj Gen (Retd) Mrinal Suman said.

Suman regretted that India has also not been able to produce "a single defence system with cutting-edge technology".

There has been a "total failure" of policies governing foreign and private participation in defence production, with imports rising to as high as 75 per cent in 2009-10, Suman said writing in an article in the premier journal 'Indian Defence Review'.

Maintaining that all hopes raised by the 2002 Defence Procurement Procedure have been "belied", Suman said the last decade has been "a chronicle of tall claims, missed opportunities and inability to translate policies into implementable programmes. The current regime has been a total failure".

To buttress his point, Suman, who himself was associated with defence procurement while in office, said imports have climbed to 75 per cent rather than dropping to the targeted 30 per cent.

"While every critical item is being imported, India continues to be happy producing (aircraft) doors and windows for foreign aviation majors," Suman said in an article in the premier journal 'Indian Defence Review'.

Despite "repeated assertions" of the government to integrate private sector in defence industry, "there is little progress on ground. The private sector continues to be a peripheral player" producing some low-tech items and components, he said.

Building a strong case for turning India into a manufacturing hub, he said for this, it was imperative that foreign direct investment (FDI) flows in.

However, FDI should be technology-centric with inherent flexibility. "It could be 26 per cent for low-tech products, 51 to 74 per cent for matured systems and 75 to 100 per cent for cutting-edge technologies," he suggested.

Observing that all countries leverage offset clauses in consonance with their national economic priorities to fill an important technological or economic void, he said, "Strangely, India does not accept technology against offsets."

With the "current flawed policy", offsets were not contributing to upgrading of the indigenous technological base, he said, calling for amending the current offset policy to make transfer of technology the preferred mode.

Asserting that India must become a key player in the global supply chain, Suman made a strong plea for setting up of a multi-disciplinary 'Defence Capability Development Board' under the Commerce Ministry to oversee the entire gamut of related activities and act as a single window interface for all entrepreneurs.