gfiles magazine

July 10, 2012

Making things simple

The government takes a shot at procedural reforms to scale up private sector participation in the defence sector
by Naresh Minocha
Stung by repeated criticism over policy paralysis, the government is set to perk up private sector participation in the manufacture of defense equipment.
The government has, however, no intention to ease the security oversight of defence production units in the private sector. The security system in fact would be tightened for which an internal exercise is underway, according to informed sources. They say that proposed reforms initiatives have reached an inter-ministerial forum for consultation and decision.
One such initiative envisages scrapping the duplication of procedures in grant of letter of intent (LOI)/ industrial licence (IL) to companies. Duplication of efforts not only delays clearance of applications but also increases the workload of the officials concerned.
The foreign equity cases, for instance, are examined separately both by the Standing Committee on Private Sector Participation in Defence Production (SC-PSPDP) in the Ministry of Defence (MOD) as well as by the Department of Industrial Policy and Promotion (DIPP).
SC-PSPDP first examines foreign direct investment (FDI) applications and then forwards its recommendations to the Foreign Investment Promotion Board (FIPB), Ministry of Finance.
SIPP, which serves as the secretariat for both foreign investment and IL applications, separately examines the applications from the foreign investment angle before giving its recommendations to the Licensing Committee (LC), an inter-ministerial panel serviced by DIPP.
It is now proposed to do away with the FDI angle scrutiny of applications by DIPP. Under the proposed reform, DIPP would strictly go by FIPB approval and forward the LOI/ IL application to the Licensing Committee....READMORE

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