DefImps to be 30Bn Dlrs by 2012: ASSOCHAM

New Delhi, May 13: With the Armed Forces expected to ink major defence deals, India's imports of military hardware and software are expected to rocket to 30 billion dollars by 2012, an Industry Chamber has forecast.

And with an ever-increasing demand for higher allocation for the Defence Budget and limited capacity of the Government to meet this demand, the Defence sector requires a re-look to procure its goods and services from existing allocations in a more efficient manner, says the industry chamber Assocham in a paper submitted to the Defence Ministry.

With Multi-Role Combat Aircraft, 155mm Howitzers, a variety of helicopters and long-range maritime surveillance planes -- the shopping list of the Indian Armed Forces is long and varied.

During the last three years, India spent as much as 10.5 billion dollar on military hardware and software -- making it the largest arms importer in the developing world.

''The Indian military budget was about 20 billion dollars in the last fiscal and is expected to grow 7 per cent annually over the next five years,'' said Assocham President Venugopal N Dhoot commenting on the chamber's paper on 'Avenues for Private Sector Participation in Defence'.

The country's military spends roughly two per cent of the GDP which is without accounting for expenditure on defence pensions, para- military forces and the Defence Ministry itself as part of budgeted Defence expenditure, he added.

In sync with the recomendations of the Vijay Kelkar Committee on 'Policy Issues and Initiatives and Integration of Users', the paper urges the Defence Ministry and the Indian industry for greater involvement of private players in the manufacture of equipment in ''an attempt for greater indigenisation of defence manufacture''.

The paper also proposes identification of entry points for players in the defence sector -- with special care to promote small and medium-sized companies.

Seeking larger private sector participation in all defence- related deals and imports, the paper points out that despite the Defence Ministry's target of achieving 70 per cent self-reliance in defence production 10 years ago, it had fallen short by 40 per cent.

The Assocham paper avers that till now only 30 per cent defence production had become self-reliant. ''This is despite the limited involvement of the private sector in the national defence sector....'' By 2005, there were about 5,100 companies supplying around 20-25 per cent of components and sub-assemblies to state-owned contractors in the defence sector -- with the key non-PSU industry participants being Mahindra&Mahindra, the Tata Group, Kirloskar Bros., Larsen &Toubro, Ashok Leyland, Jindal, Max Aerospace&Aviation and Ramoss India, the paper observes.

The paper further recommends making India's defence imports cost- effective by introducing a competitive bidding process for supplies of defence needs for its Armed Forces.

In the current format, private companies can only develop prototypes of equipment -- as a result, Defence Public Sector Undertakings obtain orders on nomination basis which effectively closes the doors on private companies.

The paper suggests making competitive bidding as the norm if private capabilities are to be leveraged.

It further asserts that -- subject to supplies being sought through the competitive bidding process -- leading corporate houses like the Tatas, Satyam Computers, Mahindra's, Kirloskar Bros, and L&T can make defence equipment to suit and meet domestic defence requirement.

The paper also recommends outsourcing for many defence activities to the domestic private sector pointing out that the Defence Ministry in recent years had made some attempts towards outsourcing and private procurement to bring in greater efficiency and optimal utilisation of available budgets.

UNI