Now even Defence Services to get into Retail!!!

The Defence Ministry has been suggested to lease out 17 lakh acres of unutilised land spread over in 62 cantonments that Directorate General of Defence Estate (DGDE) has it in its possession for 50 years for development of Retail Outlets for Defence related products and Bio Farming.

In a Paper brought out by ASSOCHAM on Outsourcing Possibilities in Defence Sector; “Unlocking the True Wealth” submitted to Defence Minister by ASSOCHAM President, Venugopal N. Dhoot on Friday, it has also been highlighted that of 17 lakh acres of land, 9000 acres is under encroachment spread over in 17 states including Delhi which should be immediately claimed by the Ministry of Defence.

Dhoot also added that Ministry of Defence (MoD) can do wonders with this land and drastically reduce its dependence on budgetary allocations by putting this land for retail chains either in private or joint sector as it will accrue it revenues in lakhs of crores and thus can become a part and parcel of inclusive growth.

Not only retail and other relevant economic activities could be brought in such landscape but also bio-fuel plants be grown in them to help Defence forces extract diesel out of their seeds for its fleet of vehicles and reduce its dependence on state owned oil companies for supplies of diesel and other fuels, added Dhoot.

The Paper has pointed out that with Indian majors like Bharti (slated to invest a magnanimous $ 2.5 billion in the India retail trade business in the next seven years with technological support from Walmart) and Reliance, Essar taking up agro-farming and retailing in a major way and foreign players too eager to share the increasingly delectable Indian Retail pie, the defence land can be utilized for better productivity by possibly leasing out this land to these retail companies. Reliance has also entered into collaboration with Punjab Agro Food Corporation so that farm & retail linkages with local communities can be executed with ease.

Punjab will become RIL’s agricultural hub as well as a mainstream centre for Reliance's other retail plans in north India. It has also picked up 2000 acres of land across Chandigarh, Ludhiana, Amrtisar and Sangrur. Essar is further the largest exporter in the country of floriculture products, leading to huge earnings of Foreign Exchange.

It has also suggested by saying that the amount of revenue this simple exercise can generate for the MoD, being ploughed back into the sector, reinvested for the development and maintenance of Defence Services, ordnance and equipment and the defence personnel. Moreover, we are sure to witness a multiplier effect of this simple exercise on the economy as well in terms of GDP growth, employment generation improving the economic status vand welfare of farmers and above all contributing to the aim of ‘Inclusive Growth’, bringing the rural India within the ambit of development.

The Chamber has also emphasised that Defence Distribution Network is one major area where outsourcing can be ventured. With the total Defence Services expenditure increased from Rs.890bn in 2006-07 to Rs. 960bn in 2007-08, India is among the top ten countries in terms of defence expenditure. With Rs 540.78bnout of this dedicated to the Revenue Expenditure, It strongly feels that the focus needs to be riveted on this aspect of Defence, which includes the non-offensive kind of items (like boots, specialized clothing, medicine, transportation and communication systems etc) primarily required for the sustenance of the armed forces.

Herein, can come in the role of the country’s largest distribution network i.e. the Defence Storage and Distribution. With the emergence of organized retailing and big foreign giants like Walmart, Sainsbury, Carrefour, Marks & Spencer and Tesco Co. Ltd foraying into the arena. Thus, outsourcing its procurement and maintenance can be leveraged to generate benefit for the Defence Sector as well as the economy as a whole. It can play a significant role in the growth of retailing sector in India having outpours for the economy. Further, it surely will seek to augment the services and products to a new level.

Source : Indiainfoline