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Experts differ on defence sector privatisation

Experts are divided on the government's decision to open up defence manufacture to the private sector and foreign investment, with some describing the move as long over-due while others asking whether major arms producing nations would allow India to emerge as a competitor when it was already dependent on them.

While some serving officers said this was a welcome move which would give a boost to domestic private players to unleash their capabilities in defence production, some former personnel said it was too early to assess the capabilities of private Indian producers.

Former senior army officer, Gen K Nambiar, said privatisation was "long over-due" and would "definitely improve the available capabilities, lead to speedy acquisition of equipment and reduce dependency on single source".

But Uday Bhaskar of the Institute for Defence Studies and Analyses said much would depend on how the new policy "translates into reality as we have so far not seen a high degree of private participation" in defence manufacture.

Another defence expert, Sreedhar, said the opening of the Indian defence market to foreign direct investment "seemed to be rather strange" and asked whether major arms producing nations like the US, Britain and France, would allow India to emerge as a competitor "in an already shrinking global arms market".

Left parties condemn defence production privatisation

Left parties on Thursday demanded that the government rescind its decisions on privatisation of defence production and opening up new sectors to FDI saying these were fraught with "serious consequences" and should be taken up for a thorough discussion in Parliament.

"The participation of foreign capital in the defence sector will compromise national security," the CPI-M Politburo said.

Referring to the Union Cabinet's decision on foreign investment in pharmaceuticals, airports and other sectors, the party said: "Such indiscriminate opening up to foreign capital has not yielded any beneficial results as seen in the glaring case of Dabhol project of Enron."

The CPI central secretariat, in a statement, said these decisions were "part and parcel of the so-called second generation of reforms for which the IMF-World Bank and WTO have been pressurising and now the Vajpayee government has surrendered."

It described the decisions as "obnoxious" and said these would have "far reaching consequences for national economy as well as our defence preparedness".

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