‘Def Min should take MEA’s help to tap overseas markets for defence PSU products’

The Defence Ministry should seek the cooperation of the Ministry of External Affairs to explore new overseas markets for the products of the newly created seven Defence Public Sector Undertakings from the Ordnance Factory Board, pointed out the standing committee report on Demands for Grants for Defence.

The report — Directorate of Ordnance (Coordination and Services) – New DPSUs Erstwhile Ordnance Factories — was presented in Parliament on Wednesday.

The committee stated that the Ordnance Factory Board (OFB), with its headquarters at Kolkata, was a subordinate office of the Department of Defence Production till September 30, 2021 and it controlled and directed 41 ordnance factories.

The Cabinet, in its meeting held on June 16, 2021 had approved to convert the production units of the OFB into seven DPSUs with 41 units, namely Munitions India Limited (MIL), Armoured Vehicles Nigam Limited (AVNL), Advanced Weapons and Equipment India Limited (AWEIL), Troop Comforts Limited (TCL), Yantra India Limited (YIL), India Optel Limited (IOL) and Gliders India Limited (GIL).

The headquarters of the new corporate entities have been selected based on the location and concentration of OFs, revenue and criticality of products.

Seeing the order book position of the ordnance factories for the next five years, the parliamentary panel stated that the defence ministry apprised them that all the DPSUs have relatively healthy order book positions, except MIL and YIL from the year 2026-27 onwards.

In the case of YIL, which registered no orders from 2023-24, the ministry apprised that since this PSU is primarily meant for supplying intermittent products, raw materials, components to other new defence companies, therefore, Order Book Position for the next five years with services in case of YIL is not applicable.

The contracts with sister New Defence Companies are being concluded on a year-to-year basis as per requirements.

Though some of the DPSUs like MIL and AWEIL are targeting Rs 5,000 and Rs 10,000 crore order books in the coming years but others are not in a comfortable position.

“The Committee recommends that the Ministry should like to seek cooperation of Ministry of External Affairs so that MEA on their part may explore new markets overseas for products of DPSUs through their diplomatic channels,” the report stated .

The panel found that except MIL, YIL and AWEIL no other newly created DPSU has been awarded any export contract. MIL has already obtained export orders worth Rs 87 crore and it aims to increase exports from the existing 2 percent of Annual Value of Issue to 8 percent by next year.

AVANI has taken many initiatives in exports, including naval guns, air defence guns, and small arms weapons.

IOL has focused on countries such as Algeria, Sri Lanka, Middle East countries, Philippines, South Africa, Nigeria, Bhutan & Nepal; however, it has not exported anything yet.

AWEIL has also started a dedicated export promotion group to earn from exports.

YIL has to export High Calibre Artillery Shells and 155 MM ERFB HE (BT/BB) Shells (40,000 Nos. worth Rs 200 Cr) and 7.62 mm ammunition, and is expecting an order for the supply of Brass and GM Cups to MIL for their expected export orders of 250 million numbers of 5.56 mm ammunition.

GIL has exported various parachutes like Brake Parachute for SU30, Brake Parachute for Jaguar and Brake Parachute for MIG-21 to different foreign countries in South East and Central Asia. Presently GIL is actively pursuing export leads in South East Asia and US/Europe.

The panel recommended that efforts should be made so that in future more export orders are secured by each and every corporation and no stone should be left unturned in achieving this objective.

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