Military May Outsource Weapons Systems

Indian industry may get business worth over Rs 10,000 crore a year following a defence ministry plan to offer production of weapons systems to the private sector.

Defence minister George Fernandes has initiated talks with the Confederation of Engineering Industry on larger involvement of Indian companies in large defence contracts. Execution of large projects on a consortium basis, where a group of companies gets together to execute a capital intensive project, formed part of the discussions.

At present Indian companies only supply components or small sub-systems to ordnance factories that integrate them into large systems. The government is now considering offering large contracts ship building to Indian companies. It plans to float tenders for such contracts.

"I am not ruling it out (involvement of Indian firms in building large defence systems) in future. Our aim is to make defence procurement as transparent and open as possible. We have started a dialogue with the industry and will see where it leads," Fernandes said. He, however, said there were no immediate schemes to offer large weapons platforms to the private sector and that this depended on technical and financial viability, security and other aspects that needed to be discussed with the industry.

The defence interest stems after a successful private sector response to the construction of nuclear plants under a scheme floated by the Atomic Energy Commission and the construction of a second rocket launchpad at Sriharikota by Indian Space Research Organisation (ISRO) through a global tender.

The commission has invited large engineering firms like Larsen and Toubro, Godrej and Boyce, the Tatas and Walchandnagar to form a consortium to build nuclear power plants. Talks with two or three consortiums are at an advanced stage. The Atomic Energy Commission will supply technical support while the private sector will build the plants on a turnkey basis. With the government focusing more on defence preparedness, the need has arisen to speedily complete weapons systems projects.

The time taken from order by the defence forces to delivery is expected to be shortened considerably. Ships, submarines, tanks, aircraft and artillery guns are manufactured by the Ordnance Factory Board or the Defence Public Sector Undertakings. These monopoly organisations are known to delay projects indefinitely, leaving the forces to make do with old equipment.

Greater private involvement will mean timely completion of projects and a ready inventory with the services, feel defence experts.