Article Posted on : - Mar 04, 2015

NEW DELHI (PTI): Government needs to treat private sector defence companies at par with state-owned firms to boost defence manufacturing in the country, a top official has said.

"We need to break away from the monopoly of the (defence sector) PSUs and need to look at private sector companies and say these are our national champions...private sector and PSUs should be treated at par," Secretary in the Department of Industrial Policy and Promotion (DIPP) Amitabh Kant said on Tuesday.

He was speaking at a function on 'Make in India' organised by University of Chicago Center in Delhi.

Citing the example of US companies, he also said that cost audit teams of public sector enterprises should work with private companies.

"I personally feel that defence manufacturing will take off if we do about 100-150 make programmes and if we identify about 50-60 Indian companies as national champions who will drive our defence manufacturing," Kant added.

Under make programmes, he explained that defence equipment could be identified and work can be done on them.

To boost domestic defence manufacturing and reduce import bill of the country, the government has increases foreign direct investment (FDI) limit to 49 per cent through approval route in the sector from the earlier 26 per cent.

The move is aimed at boosting domestic industry of the country which imports up to 70 per cent of its military hardware.

Further, FDI above 49 per cent will have to seek the approval of the Cabinet Committee on Security on "case to case basis, wherever it is likely to result in access to modern and state of the art technology in the country.

"In defence sector, we need to unleash many more make programmes. You have done only 2 make programmes...you need to unleash many more," he said.

Kant said that the steps announced by the government will take some time to yield fruits on the ground.

"Structural changes, scrapping processes, procedures. It is going to take years. I am telling you, you would not get benefits (soon)...if you expect results to come in 3-4 months time, you are living in another world. It's going to take minimum 18 months.

"The problem in India is that companies are highly over leveraged. Banks are over leveraged, so it will take a little while. To my mind, wait for another 18 months," he added.

Emphasizing on the need to focus on manufacturing to create jobs and boost economic growth, Kant said the government is taking steps to improve ease of doing business in the country.

Under 'Make in India', he said government is focusing on improving infrastructure, ease of doing business and taking FDI related policy decisions.

"We need to push infrastructure in a very very big way.

India will have to push for advance manufacturing and also on labour intensive sectors to create millions of jobs," he said.

The Secretary said that the DIPP is working on 98 parameters over which states can be ranked for ease of doing business in terms of 'best and worst performers'.

Quality Council of India (QCI) Chairman Adil Zainulbhai said that 'Make in India' concept should be "Making in India" with quality to boost manufacturing in the country.

He informed that QCI is working on two major things to improve quality in goods and services both.

He said that the council is working with about 6,000 small and medium enterprises (SMEs) to improve their quality of goods and delivery of services.

"There are 35 million SMEs and QCI is working with all the industry associations and is helping 6,000 of them...Our goal is try and expand that and get to improve quality and a millions SMEs in the next few years," the Chairman said.

"The other big step we are taking which is also linked to 'Make in India' in many ways is the ability to improve the quality of government services as deliver to the individual citizen," he said adding many people would say that the quality of government services that one get from departments are "pretty bad".

He said the goal of the QCI is to lay out "standards of what quality we should achieve as a government, central, state, municipal, zila parishad etc for services and then measure it and track it and help them improve".