Defence PSU orders down 33% amid push to pvt sector

Vijay Mohan

Tribune News Service

Chandigarh, December 25

As the government gives an impetus to the private industry to manufacture equipment for the Armed Forces, the quantum of contracts awarded to Defence Public Sector Undertakings (DPSUs) has fallen by about 33 per cent over the past three years.

The value of capital contracts bagged by DPSUs in 2015-16 was Rs15,617 crore, which came down to Rs12,374 crore in 2016-17 and further fell to Rs10,475 crore in 2017-18, according to information placed by the Ministry of Defence (MoD) in Parliament this month.

On the other hand, the number of contracts awarded to DPSUs has flip-flopped from 22 in 2015-16 to eight in 2016-17 and 15 in 2017-18, the MoD data revealed.

There are nine DPSUs in the country that function under the Department of Defence Production in the MoD that manufacture weapons, ammunition, armoured vehicles, heavy vehicles, aircraft, helicopters, warships, submarines, missiles, electronic equipment, earth moving equipment and special alloys.

“The government is pursuing initiatives to achieve higher levels of indigenisation and self-reliance in the defence sector. This is sought to be achieved by harnessing the capabilities of both public and private sector industries in the country,” the ministry stated.

Towards this end, the number of items requiring an industrial licence has been reduced. A total of 394 licenses have been issued to 239 Indian companies for manufacture of defence items since 2001.

DPSUs and Ordnance Factories, which also function under the same department, have, as a policy, been outsourcing many of their requirements to medium and small-scale enterprises apart from large-scale industries.

However, based on Budget allocation to the Armed Forces for revenue expenditure, there has been a reduction in procurement of supplies by the services, which has resulted in proportionate reduction in procurement of input materials. Consequently, some supply orders placed in micro, small and medium enterprises have been cancelled or short-closed.