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Production of dual-use items may come under licence regime

Production of dual-use items may come under licence regime
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First Published: Thu, Jun 02 2011. 10 40 PM IST
Updated: Thu, Jun 02 2011. 10 40 PM IST
New Delhi: The government may soon bring the production of hundreds of items that have both military and civilian uses, ranging from ready-to-eat meals to high-end electronic and surveillance equipment, under a licence regime.
The defence ministry circulated an exhaustive list of such dual-use items to various industry associations last month, soliciting their views.
The list, a copy of which has been reviewed by Mint, was prepared in consultation with the army, the navy, the air force and defence public sector units.
Also See Defence items & Electronic Aerospace items for inclusion in IDR Act for license (PDF)
It includes military clothing, bullet-proof jackets, helmets, fibre-glass items, cranes, material-handling equipment, fire tenders and snow boots.
Components used in weapons systems, arms and ammunition, naval ships and warships are also on the list.
The bulk of such components are typically manufactured by small and medium-scale enterprises and then integrated into defence systems. Most of these items are currently exempt from licensing restrictions.
“Such provisions will be very restrictive. There is no rationale for bringing in a licensing regime when most of these items have already been delicensed two decades back,” said Dhiraj Mathur, a defence analyst with PricewaterhouseCoopers India. “The government should only license lethal technologies and finished products but not components, most of which find wide use in other areas too.”
Deba Mohanty, senior fellow at New Delhi-based Observer Research Foundation, said licensing should be limited to high-end technologies. “Other low and medium technologies should be kept out of it.”
Mint first reported on 16 May that the government is considering bringing under a licence regime the production of dual-use items as well as services rendered to overhaul and repair defence equipment.
Industry executives and government officials met the same day to discuss the matter, after which the list was prepared.
The government is also considering licensing software for the development, production or use of defence items and equipment, modelling, simulation or evaluation of military weapon systems, simulation of military operation scenarios, and command, communications, control, computer and intelligence (C4I) applications.
The government is carrying out an exercise to assign category codes to each component that finds use in defence and domestic security. This could not only help track production and use but also monitor the equipment foreign vendors help produce in India to fulfil their offset obligations.
Under its defence procurement procedure, India imposes counter-trade obligations on original equipment manufacturers that are awarded defence contracts worth more than Rs 300 crore. These obligations range from anywhere between 30-50% of the value of the contract. To meet this obligation, foreign vendors partner with Indian firms.
aman.m@livemint.com
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First Published: Thu, Jun 02 2011. 10 40 PM IST