backbone
network for the field army; and the Future Infantry Combat Vehicle (FICV), an
armoured, tracked vehicle that carries infantry into battle.

Last year, the
Rs 89 crore allocated for 'Prototype Development' exactly matched the payout to
be made for the TCS project. But MoD has not disbursed a single paisa of this.
The amount will be surrendered on March 31.

"The
non-utilisation of last year's allocation, and the allocation of just Rs 1
crore for this year, makes it clear the MoD is paying lip service to
indigenisation. Clearly no 'Make' category projects will see any progress in
the coming year," says a chief executive officer (CEO) of a company engaged
in the defence business, speaking anonymously.

Business
Standard has learnt the MoD's acquisition wing has handed the national security
advisor a list of 100 defence items that can be pursued indigenouslyas the
'Make' category projects. But there has been no movement on these projects,
either in the MoD or the National Security Council.

Further, the
Ministry of Finance (MoF) has ignored the recommendations of the Federation of
Indian Chambers of Commerce and Industry (Ficci) and Confederation of Indian
Industry (CII) that defence manufacturing be given tax benefits under Section
80-IA of the Income Tax Act, which is provided to long-gestation,
capital-intensive industries such as power.

This
compensates domestic industry for the high cost of capital in these
long-gestation industries. Under Section 80-IA, the profits that eventually
accrue are allowed a five-year tax holiday. Ficci and CII have argued that
defence manufacture, a highly capital-intensive industry, should be allowed
this incentive. The Budget has entirely ignored this recommendation.

"It is
disheartening that the government has again ignored the important issue of
extending Section 80-IA benefits to