Cautioning the PSUs to prepare for “more competition” from the private Indian entities, Defence Minister A K Antony said under its new policies, the Ministry will stop nominating government-owned companies in the Naval contracts.

Observing that the indigenisation process in the defence sector was very slow, he said India was aspiring to be a member of UN Security Council and its “heavy dependence” on foreign countries for defence needs was not a good situation.

“Government has taken a decision that from January 2011 onwards, the Defence Acquisition Council (DAC) will not give any nominations to the defence shipyards for Naval projects and they will have to compete with the private shipyards for the tenders,” Antony said in New Delhi.

The Government will procure equipment for the Navy under ‘Buy Indian Make Indian’ category where both PSU and private sector shipyards will have to compete for tenders, he said.

At present, the DAC nominates the PSUs as the production agency for defence contracts.

“Buy Indian and Make Indian’ is going to be the major component of our procurement policy. That will help us to have a strong defence industrial base in India,” he said.

Asserting that it was high-time for the DPSUs and the OFBs to act, the Defence Minister said, “I caution you (PSUs and OFB) and seriously tell you to get ready for more competition from the Indian private sector.”

Antony said that in the age of globalisation, no country can move towards zero imports but 65-70 per cent dependence on imports for defence equipment was not a good situation.

“For India, which is aspiring for the UN Security council membership, still depending heavily on foreign countries for majority of its defence needs is not good for us,” he said.

“We have to reverse this trend. We will support the PSUs but at the same time PSUs alone would not be able to meet the requirements of the armed forces,” Antony said at a function to present Raksha Mantri’s Awards for Excellence for the Year 2008-09 to Ordinance Factories (OFs) and Defence Public Sector Undertakings (DPSUs).

He said initially the policy would be applicable for Navy only, gradually it would be extended to other two forces.