The Telegraph
Tuesday , June 10 , 2014
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Foreign funds for defence

New Delhi, June 9: President Pranab Mukherjee has outlined a robust defence policy in which the Narendra Modi government aims to liberalise foreign investment in military hardware production, encourage the private sector and rapidly re-equip the armed forces.

Prime Minister Modi, too, is expected to set the tone for defence preparedness by making his first trip after assuming office to the latest weapons platform of the military — the aircraft carrier INS Vikramaditya (formerly the Admiral Gorshkov).

Modi is expected to fly to the carrier off the coast of Goa on June 14. The vessel is now operational after joining the Indian naval fleet in January this year. But it will take the prime ministerial visit to showcase its capabilities.

In his speech to Parliament today outlining the government’s agenda, the President said it would reform defence procurement.

“We will encourage domestic industry, including the private sector, to have a larger share in design and production of defence equipment. We will introduce policies to strengthen technology transfer, including through liberalised FDI (foreign direct investment), in defence production.”

Though successive governments have committed themselves to self-reliance in defence production, more than 80 per cent of the equipment with the military is imported at the cost of precious foreign exchange.

In the UPA-II government, defence minister A.K. Antony was against raising the FDI cap in defence production above 26 per cent.

Arun Jaitley, the finance and defence minister in the Modi administration, indicated on his first day in office earlier this month that he was taking a re-look at the policy.

In his speech today, President Mukherjee said the government would set up a National Maritime Authority (NMA) for coastal security. Steps to improve coastal security were taken by the UPA-I government after the November 2008 Mumbai attacks by terrorists who had come to the city taking the sea route.

But the plan to set up coastal radars and other systems has been lagging targets, largely because of a multiplicity of authorities. The intention to set up the NMA is aimed at creating a single power centre for coastal security.

The President’s address also addressed some long-standing demands of the armed forces. It said the government would build a National War Memorial to honour soldiers who have fallen in war.

The Centre will also implement the one-rank, one-pension scheme, a demand for which military veterans had surrendered medals during the UPA-II’s tenure.