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Our Bureau,

Bangalore , Sept. 27

THE Union Minister of State for Defence, Mr Chaman Lal Gupta, on Friday forecast a larger role for the small and medium industry in the production of defence items, as he hoped the opening of the defence sector to the private sector would attract large industries in the production of complete systems and platforms. The private sector's role has been limited to supplies of sub-assemblies and complete assemblies.

Addressing members of the Federation of the Karnataka Chambers of Commerce and Industry (FKCCI) here, Mr Gupta said the opening of the defence sector in May 2001 to private sector participation by allowing production of items under licence, which also included foreign direct investment up to 26 per cent, has "created considerable enthusiasm" in the private sector.

"I trust that some large industries would soon come up with production of complete systems and platforms. In such an event, as it has been witnessed all over the world, small- and medium-scale industries indirectly gain through supply of components and raw material to the major industry which are involved in the production of full systems."

Mr Gupta said the private sector has supplied more than 20 per cent of defence supplies at Rs 1,100 crore during fiscal 2002-03. However, he added, there was a need to step up outsourcing to significantly higher levels. With the increasing importance of information technology, the potential for higher outsourcing existed.

To encourage larger participation of SMEs in the defence sector, the Government has set up Vendor Advisory Cells to guide and assist prospective SSI vendors interested in supplying defence products. SSIs were also provided with various concessions such as issue of drawings and specifications along with tender documents free of cost.

Earlier, Mr K.N. Jayalingappa, President of FKCCI, urged the Government for more transparency in the defence production sector to facilitate participation of the private sector.

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