Kelkar Committee set up by the Government to examine and recommend changes in
the acquisition procedures and enabling a greater participation of private
sector in defence production submitted the first part of its report to Defence
Minister here today. The report was handed over by the Chairman of the
Committee Dr. Vijay L Kelkar to the Defence Minister Shri Pranab Mukherjee.
the report, Shri Mukherjee thanked Dr. Kelkar and other members of the
Committee for successfully completing the arduous job.
The thrust of Part I of the Report of the Committee is
“Towards strengthening self-reliance in Defence Preparedness”. This Report takes into account increased
capabilities of Indian Industry and growing globalization of Defence industry.
The Committee’s proposals focus on encouraging involvement of country’s best
firms in Defence Capability Building, pursuing Offsets policy to bring in
Technology and investment, exploring synergies amongst private sector Defence
Public Sector Undertakings (DPSUs),
Ordnance Factories (OFs) and Defence Research and Development
Organisation (DRDO) to promote high technology capabilities and creating an
environment for quantum jump in export of defence equipment and services.
Committee has adopted a long-term approach to prepare a policy regime that
would encourage India’s best firms to enter in the field of defence
production. To promote innovation,
efficiency and cost cutting, the Committee has adopted a strategic perspective
in formulating proposals towards acquisition policy reforms. The main recommendations of the Committee
Preparation of a 15-year long-term plan forming the
basis for acquisition programme.
Information sharing of requirement of Armed Forces
with the Industry.
Identification of entry points for the private
sector in the acquisition process.
Accreditation and fostering of Raksha Udyog Ratna
Evolve policy framework to promote participation of
Small and Medium Enterprises in defence production.
Setting up a new professional agency for defence
Provide Defence Research and Development
opportunities both with DRDO and industry.
To promote transparency in decision making.
To encourage optimum utilization of existing
To work out Request For Proposals (RFP) to include
an Offset Clause for contracts valued at Rs. 300 crores and above.
To re-examine the concept of Negative List for
Defence exports and setting up of an Export Marketing Organisation.
The Committee has also suggested a strategy for
implementation of its recommendations, along with a time schedule. The Committee has also carried out
an impact analysis of the recommendations made in Part I of its Report. This analysis indicates that besides
providing strategic depth for Defence preparedness, the implementation of the
recommendations of the Committee would also result in substantial economic
benefits to the country. The measures
outlined in the Report when implemented would lead to a high degree of
indigenous production, resulting in increased growth in the GDP, greater
employment opportunities and substantial savings. There would be greater self-reliance in Defence Production,
benefits in terms of R&D, technology spin offs, higher industrial growth,
higher exports, increased competition and more employment opportunities,
besides cost savings.
terms of reference of the Committee which initiated work in July 2004 were :
(i) to examine the current procedures and
recommend changes required in order to modify acquisition process on an
approach based on a “product strategy” for items which need development
internally or through the Transfer of Technology route.
(ii) to examine and recommend modalities of
integration of the User, the Defence Ministry and the Indian Industry including
both private and public in the acquisition process of products required by the
Armed Forces and being procured through the “product strategy” approach.
(iii) to examine and recommend changes so as
to increase defence exports and incorporation of offsets in defence
acquisition. This included examination
of the approaches to be adopted for seeking credit lines at
beneficial/differential rates, facilitating export of Defence goods to
countries which are not economically strong.
(iv) The committee was also asked to set up a
sub-group/sub-committees of members of the main Group to examine and make
recommendations for appropriate changes in the areas as indicated to facilitate
DPSUs and OFs to assume the role of designer and integrator, enabling them to
build consortium of industries around them for product development and production.
members of the Committee included the three Vice Chiefs of Armed Forces,
distinguished scientists and experts, representatives of Integrated Defence
Staff, Department of Defence, Department of Defence Production, DRDO, Ministry
of Finance and Defence (Finance). Two
major Industry Associations viz. FICCI & CII were also adequately
represented on the Committee.
Part I of the Report covers the first three Terms of References. The Part II of
the Report, relating to its 4th Terms of Reference would be
submitted by the Committee separately. The Government would have the Report
examined and implement its proposals expeditiously.
The other members of the Kelkar Committee were Shri
Jagdish Khattar, CMD, Maruti Udyog Limited,
Shri N.R. Mohanty, ex-Chairman, Hindustan Aeronautics Ltd., Shri Prabir
Sengupta, Ex-Secretary, Govt. of
India- presently Director IIFT, Lt. Genl. Satish Nambiar, Director,
United Service Institute, Dr. K Santhanam, Director, Institute of Defence
Studies & Analysis. Shri M.V. Kotwal, Executive President, Larsen &
Toubro, Shri Rahul Chaudhary, CEO, Strategic Electronics Div., Tata Power
Co.Ltd, Shri Atul Kirloskar, Chairman,
CII National Committee on Defence, Shri Ashok Kanodia, MD, Precision
Electronics Ltd., NOIDA, Dr. Amit Mitra, Secretary-General, FICCI, Cmdr. A
Ghosh, Joint President & CEO, VXL Technologies Ltd, Shri Ranjit Issar, Addl
Secretary, Ministry of Defence (MoD), Shri
S Banerjee, Addl Secretary (Defence Production), MoD, Ms Dipali Khanna, Addl
Financial Adviser, MoD, Dr. D Banerjee, Chief Controller Research and
Development, DRDO, MoD, Shri Anurag Goel, Addl. Secy (Exp.) Ministry of
Finance, Lt Gen BS Thakur, Vice Chief of Army Staff, Air Marshal SK Malik, Vice
Chief of Air Staff, Vice Admiral Yashwant Prasad, Vice Chief of Naval Staff,
Vice Admiral Raman Puri, Chief of Integrated Staff Committee (CISC), Shri Tapan
Ray, Joint Secretary (Export), MoD and Shri Alok Perti, Joint Secretary
(Supply) were the member Secretaries of the Committee.
(Release ID :8386)