Kelkar Committee

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The Government of India set up a committee under Mr Vijay Kelkar to recommend measures to bring about improvements in defence acquisitions and production. It was given the following terms of reference:

• To examine the current procedures and recommend changes required in order to modify acquisition process on an approach based on a “product strategy”.

• To examine and recommend modalities of integration of the User, the Defence Ministry and the Indian Industry (both private and public) in the acquisition process.

• To examine and recommend changes so as to increase defence exports and incorporation of offsets in defence acquisition.

• To examine and make recommendations for appropriate changes to facilitate Defence Public Sector Undertakings and Ordnance Factories to assume the role of designer and integrator, enabling them to build consortium of industries.

The Committee commenced work in July 2004 and submitted its report in two parts in April 2005 and November 2005 respectively. The Government has accepted most of its recommendations. Major recommendations of the Committee are as follows:-

• The Government should evolve a 15 Year Long Term Plan for defence acquisitions and share it with the industry.

• Entry points for the private sector should be well identified and a policy should be evolved to promote participation of small and medium enterprises in defence production.

• Select private sector companies should be accredited as Raksha Udyog Ratna and treated at par with the public sector.

• There is a need to establish a professional acquisition agency, like the DGA of France.

• Defence research and development should be opened to the industry also.

• Decision making should be transparent and existing capacity should be fully utilised.

• All contracts of over Rs 300 crores must carry an offset obligation.

• Negative list for defence exports should be reviewed and an organisation should be established to promote defence exports.

• The Ordnance Factories should be corporatised.

• • The public sector should have greater freedom as regards forming of joint ventures and cross investment in foreign countries for obtaining technology.

The Government is seized of the above recommendations and has already constituted an expert committee under Mr NS Sisodia to recommend changes in the acquisition organisation.