Article Posted on : - Feb 16, 2016

A representational photo.

MUMBAI (PTI): If the defence procurement system is open and transparent, it can bring down the purchase cost by at least 20-25 per cent without compromising on quality parameters, Defence Minister Manohar Parrikar said on Monday.

He also said the new Defence Procurement Policy (DPP) will come into effect from April 2.

"If we keep the defence procurement system open and transparent, it can bring down the cost by at least 20-25 per cent without compromising on quality," Parrikar told reporters on the sidelines of the Make in India Week here.

But stressing his point the Minister without naming companies, said, recently he cleared three procurement proposals out of which one company offered 50 per cent discount while the other offered 20 per cent without compromising on quality and safety parametres.

When asked how the Make in India drive will help localisation of defence production as large MNCs normally do not share their technologies, he said the forthcoming offset policy will have mandatory local production with tech transfer and if not, local production with mandatory local sourcing.

Parrikar, however, admitted that defence procurement is a different animal as most of the terms of manufacturing contracts depend on volume which we alone cannot order.

Therefore all the items cannot be produced here.

Projecting a 1 lakh employment generation potential from the defence sector alone in the manufacturing space over the next 5-7 years, the minister said the sector will need to have to skill around 1 lakh people if we were to improve local production.

When asked how the ministry will ensure quality of defence production as most of the defence forces turn down locally made items, like by the PSUs, he said this is a challenge but he is working out how to improve the after sales from the PSUs.

Most of the PSU made products have had issues about safety and longevity, and defence forces have not been forthcoming in commissioning them.

Parrikar was quick to point out that the issues with the Arjun brand main battle tanks will soon be resolved. He also said the Air Force has ordered as many as 100 Tejas LCAs recently, which shows that all the locally made models are not lacking in quality.

The minister also said since he took over, as many 370 manufacturing license have been issued apart from around 50 Memorandum of Understandings (MoUs) with multinationals.

He said the defence exports has been growing at two per cent, mostly from private sector, but off late even PSUs are doing so and the government is keen to push this up further.