Geography Reference
In-Depth Information
ent purchases still account for nearly 60 per cent of Arjun's production cost, and there is
a strong lobby in the army which prefers Russia's old T-72s and more recent T-90s, even
though the Arjun has done well in comparative desert trials against the T-90. Shukla argues
that it is poor production facilities at the ordnance factories for the Arjun, and for the Tejas
at HAL, that deter the army and air force from favouring Indian tanks and jets. 'The Tejas
and the Arjun have a common problem: they are excellent indigenous designs that are un-
dermined by poor production quality,' he wrote. 43
The DRDO is now beginning to change under a new director general, Avinash Chander,
who was appointed in June 2013. Previously in charge of the successful Agni missile pro-
gramme, Chander has introduced top-line management responsibility for equipment de-
velopment and production programmes by placing each of the DRDO's seven technology
clusters under executive directors who have been moved from the organization's palatial
Delhi headquarters to work in laboratories in Bengaluru, Hyderabad, Pune and elsewhere.
They will no longer be advisers and co-coordinators, working separately from project man-
agers, but will be responsible for projects developed by their laboratories. There is also a
plan to build up India's export of equipment and partnerships with foreign manufacturers -
the US is discussing jointly manufacturing anti-tank missiles in India and arranging for the
DRDO to work with Lockheed Martin and Raytheon on future missile developments.
Private Sector
The public sector's dominant role was introduced when defence production was included
in the Industrial Development Regulation Act of 1951. This was not changed by the 1991
reforms, but it was relaxed in 2001 when private ownership was formally allowed into
defence manufacturing. Non-lethal items were opened up on a general basis, and lethal
products were also released subject to licences issued case-by-case by the commerce min-
istry's Department of Industrial Policy and Promotion, with the approval of the defence
ministry's Department of Defence Production. Foreign direct investment was also permit-
ted up to 26 per cent of a company's equity. More than 26 per cent was allowed in 2006,
but most applications were rejected (26 per cent is a significant figure in Indian company
law because it gives an investor blocking rights on decisions since it can call emergency
general meetings).
Little of significance happened in the following years because of opposition from the de-
fence establishment. In 2005, a committee headed by Vijay Kelkar, a leading economist and
government official and adviser, recommended, along with other reforms, 44 that the best
private sector firms be given the status of Raksha Udyog Ratnas (defence industry jewels
or champions). These companies would be treated by the government on an equal footing
with DPSUs when allocating projects. In 2007, the ministry examined 40 companies and
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