From: sanjeev nayyar
|Defence without industry?|
|Import substitution can drive new wave of industrialisation|
|Business Standard / New Delhi February 09, 2011, 0:05 IST|
As the Aero India show gets under way in Bengaluru today, two facts are worth dwelling on. India is — and has been for three years — the world's largest importer of defence hardware. Also, in a list of the 15 largest exporters of defence hardware, India simply does not figure. No other country with a serious defence budget has such a skewed import-export picture. Only one conclusion is possible: something has gone seriously wrong with the indigenisation effort, and with the building of a competitive defence hardware industry.
Not long ago, it had looked like a new leaf was being turned. The economist Vijay Kelkar had submitted a report suggesting (among other things) that private sector participation be encouraged when it came to defence production. After some initial steps in this direction, the government backtracked. Now, it is watering down the offsets condition that would have used import contracts to support related domestic manufacture (read Ajai Shukla in Broadsword on this page yesterday). There are large industrial houses that are capable of making a contribution, and indeed have shown interest in the business, but they are being systematically discouraged. The beneficiaries are not public sector rivals, as some might imagine, but international suppliers. If something is not done to change this situation, the skew in the import-export picture will continue to bear testimony to the failure of indigenisation in a vital area.