Savings from delayed foreign deals to push indigenous projects
The defence ministry has initiated a process to identify potential savings that can be made this year due to delays in production orders placed on foreign companies and could channel some of the resources to fast-track indigenous programmes that hold the key to sustaining local industry. Source said that foreign equipment manufacturers are being approached to understand which programmes are likely to see delayed deliveries and the way forward would be to defer payments for late deliveries, without invoking the penalty clause. Once the exercise is complete, the ministry would be able to understand how much of its committed liability payments could be freed up this year and could be channelised for Make in India projects. Several large ongoing programmes consume 90% of the defence capital budget, including the Rafale fighter jet deal, which is likely to see delayed deliveries by three to six months. With these large payments likely to be deferred, there is fresh focus on seven Make in India programmes that are in the final stages of signing and have the potential of sustaining more than 2,000 defence manufacturing units and MSMEs. The largest of these is the Rs 39,000 crore order for 83 Light Combat Aircraft (LCA) that is currently awaiting a nod from the Cabinet Committee on Security (CCS). The order for two regiments of Akash air defence missiles worth over Rs 6,000 crore is also in the final stages and could be fast tracked to be signed this year. The third project that could be fast-tracked is the order for six regiments of Pinaka Multi Barrel Rocket Launchers (MBRL) that has been pending since 2017. On the shipbuilding front, four big projects hold the key to private sector yards making it out of the Covid-19 crisis. These include the order for eight Fast Patrol Vessels While combined, these programmes are worth much more than the capital budget, kick-starting them would require only a 10% advance payment that could be channelised from savings made from foreign payments.
