Thursday, August 28, 2014

Technology Development Fund was established in 2011 as follow up to the twin funds recommended by Kelkar committe.

What is the objective of Technology Development Fund ?
TDF objective:  It aims to provide necessary resources to public and private sector companies, including SMEs, as well as academic and scientific institutions to support research and development of Defence systems that enhance cutting-edge technology capability in the country.

What actually did the Kelkar Committee recommend ?
Kelkar committe recommendations : The committee was set up 2005 to suggest measures for acquisition procedures and private participation. It recommended setting up two funds which are:

(a) Strategic Defence Industry Fund(SDIF)

(b) Defence Technology Product Development Fund(DTPDF)

SDIF  got initial disapproval from Finance ministry due to its not lapsable nature. It also created burden on already stressed revenue budget of defence sector. But the pronouncement of Defence procurement policy of 2006, calling for upto 80% investment from MoD served the raison d’etre of SDIF.

  • TDF  was delayed due to absence of any scheme to utilise it. 
  • A similar technology fund is available with DRDO, a principal arm for technology development for defence sector, thus creating confusion and overlapping. 
  • It also suffers from the problem of its control i.e. the fund dispersal need legislative approval everytime. 
  • It has to be distributed among three services, each getting a token amount insufficient to meet its purpose.

This fund however remained unutilised for which purposefully it is hence relaunched in 2014 budget with a sum of Rs 100 crore. It is a non-lapsable fund which will require the approval of parliament to utilise the sum of money.

(A similar effort made more than five years back ran aground because it was not found feasible to create a 'fund' and, more importantly, framing the scheme proved to be a greater challenge.The new proposal should also not end the same way as the effort to make budgetary provisions for assistance to small and medium enterprises for technology development. A budget head was opened for this purpose several years back but efforts at formulating a scheme to operationalise the idea did not succeed.The past experience would come in handy while formulating the scheme for the proposed Technology Development Fund. )

The Kelkar Committee had recommended the following regarding the acquisition procedures and enabling a greater participation of Private sector in defence production

Acquisition Procedure 
1. Prepare a 15 year long plan as the base of acquisition programme

2. Setting up professional agency for defence acquisitions
3. To promote transparency in decision making

Participation of Private Sector 
1. Information sharing between Armed forces and Industry

2. Identification of Entry points for Private sector in acquisition process
3. Policy framework for SME participation in defence production
4. Providing funds to Private Companies and SMEs for developing cutting edge technologies
5. Awarding the Private companies for developing technologies

The acquisition procedure suggested will certainly help avoid lobbing and futuristic acquisition, however, setting up a separate professional agency for acquisition can be avoided by involving experts in acquisition at MoD level with transparent process in place.

The Private participation is already in place, companies like Godrej, L&T, Tata do provide lots of key component to DRDO. However, they should be encouraged to pursue R&D instead of just manufacturing. The Technology development fund does so to some extent but its just meager amount to bring about any big leap in ‘Make’ Policy of India.

Miscellaneous !!




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