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Parrikar rules out disinvestment of def PSUs, OFB

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Defence Minister Manohar Parrikar addresses the ASSOCHAM Global Investors Summit - Defence Sector, on the second day of Defexpo 2016 at Quitol in South Goa on Tuesday. A PTI Photo.

PANAJI (PTI): Indian Defence Minister Manohar Parrikar on Tuesday ruled out disinvestment in the defence public sector undertakings as he asserted that there are certain areas where the role of these institutions cannot be taken over by private players.

"To create trust is my motto in the department (defence ministry) itself. We are maintaining a big armed force not with an expectation of war. No one likes war. Even staunch hardliners would say war is the last option," he said at ASSOCHAM's Global Investors' Summit organised on the sidelines of the ongoing Defence Expo at Betul-Naqueri village.

The minister said that although there is no war-like situation, the ministry spends Rs 3,41,000 crore on the maintenance of the defence forces.

"This we have been doing for the last 68 years. It is the eventuality (of war) which requires us to do this," he said.

"Similarly, the requirement of defence forces prompts us to create capabilities for certain products which may not be required continuously by us. This expertise which is built up cannot be retained by the private sector as it includes costs," the minister added.

A particular type of ammunition may be required once in three years, he said, adding that in such a case, for two years, Ordinance Factories Board (OFB) has to retain the capability, technology and manpower without putting these to use on a regular basis.

"Retaining the Ordnance Factories Board and defence PSUs for certain products is a necessity for the defence forces. In the private sector, the moment I cease to give you orders, you will shut down," he told the meet attended by global investors.

"Only the government can afford to sustain such capacities that are created for a number of years for future requirements," he said, adding that "the first target of my ministry is not procurement but to ensure that the armed forces are provided the best equipment".

"By the time the new DPP starts taking effect, we will be clear on exactly how we are going to proceed, including on the financial aspects of the defence budget," Parrikar said.

Reacting to criticism of the defence budget, the minister said "unnecessary comments" are being made without any attempt to understand the aspects related to defence procurement.

"What I am paying today, 85 per cent of it I have contracted long back. If I have contracted some fighter five years back, I pay for it today. This is termed committed liability in defence capital acquisition," he explained.

"What has been ordered five years back is actually being paid for today. What I ordered last year and this year, only 10-15 per cent payment has been done. Even if I order (purchases worth) Rs 1,52,000 crore, the real payment hardly exceeds Rs 15,000 crore for future procurement," Parrikar explained.

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India  Defexpo  Parrikar  Defence  PSU  OFB  
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