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Defence exports have dropped to laughable level

New Delhi: There has been a "total failure" of policies governing foreign and private participation in defence production, with imports rising as high as 75 percent and exports falling to a meagre Rs 12.28 crore in 2009-10, a former Army officer has said.

Maintaining that all hopes raised by the 2002 Defence Procurement Procedure have been "belied", Maj Gen (Retd) Mrinal 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 percent rather than dropping to the targeted 30 percent. India has also not been able to produce "a single defence system with cutting-edge technology".

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".

"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 percent for low-tech products, 51 to 74 percent for matured systems and 75 to 100 percent 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.

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