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India Inc seeks greater role in defence supplies
New Delhi, Jan 13 (IANS):
Published on 13 Jan. 2010 11:31 PM IST
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The government Wednesday released a report that says industry wanted India’s defence order book to be more visible, and that more tenders be issued for domestic companies to bid for military equipment supply. “Feedback from industry reveals that it is seeking clearer definition and enhanced visibility to be given to the government’s order book,” said the report released by Defence Minister A.K. Antony. Titled “Opportunities in the Indian Defence Sector -- An Overview”, it said the move would help domestic companies to align business planning with the country’s defence needs, and provide the government “the benefit of greater security of supply”. India, dependent on imports for 70 percent of its defence equipment requirements, is the world’s 10th largest spender in this area, with its payout growing at 9.3 percent annually. “Companies believe there should be greater participation by industry during the formulation of the RFPs (Request for Proposals),” said the report prepared by the Confederation of Indian Industry (CII) and consultancy KPMG. “There is common consent that the RFI (Request for Information) process is not being used to provide sufficient rationalisation of requirements.” The report also said that in “single vendor situations”, the government should act with discretion and avoid competition. “Industry also felt that on certain occasions, avoidable expenses are incurred through the use of competition where a particular product or technology was clearly preferred,” it said. “There should be procurement procedures which allow for and dictate the circumstances wherein a single source procurement can be made.” India has doubled its direct capital acquisition budget from Rs.62 billion in 1999-2004 to Rs.137 billion in 2004-2009. However, industry believes that to avoid underspending of defence budget, rolling budgets should be introduced. “A second major source of concern for industry over the procurement process, once commenced, is the lack of predictability and flexibility. A consequence of this is the annual defence underspends.” In this connection, the report noted that the surrendered amount is relocated to the finance ministry and may not be available for the defence sector the following year. “Hence, there has been a demand from industry to introduce the concept of rolling budgets, allotting the underspends from prior years to the following year’s annual budget in order to ensure that ongoing procurements are not stopped for lack of funds.” Meanwhile,with slow procurement of critical equipment worrying the armed forces, Defence Minister A K Antony today said his Ministry was working towards amending the procedure this year for “avoiding delays” and “judiciously” hastening purchases. Responding to the defence industry’s views that the provisions in Defence Procurement Procedure (DPP)-2009 were alright but there were weaknesses in their implementation, Antony said the policies were “not revolutionary” but he would certainly take the industry’s observations seriously. “Our procurement policies are not a revolutionary policy; it is growing, we are gaining from every experience. Now every year we are amending the procedure out of our experience and your suggestions. So last year we made some amendments. Now you are saying amendments are alright but implementation part there are some weaknesses. I will take it seriously,” Antony told members of the industry and the armed forces. “We have already started next amendments. In this year’s amendments (in the) DPP 2010, we must take two aspects seriously.

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