CHAPTER 12
DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH

12.1    Wasteful expenditure

The Standing Finance Committee (SFC) of the Department of Scientific and Industrial Research (DSIR) in March 1995 approved a project for development and establishment of pilot scale production of piezoelectric ceramic filters and resonators for use in electronic receiving equipment at a cost of Rs 128 lakh. The project was to be implemented by Central Electronics Limited (CEL) over a period of two years i.e. by March 1997. The contribution of DSIR to the project was Rs one crore including Rs 10 lakh for equipment for encapsulation and final testing.

The project aimed at the production of filters and resonators in a commercially viable manner. CEL in its proposal had pointed out that piezoelectric ceramic filters and resonators had a high market demand in the country, which was being met through imports. After satisfactory development of the products, it would be possible to supply the components at prices competitive to the cost of the imported components. The commercial production of filters and resonators involved manufacturing of piezo-electric filters and resonators, testing and standardising of the components and encapsulating it suitably.

DSIR released Rs one crore for the project as grant-in-aid during the period March 1995 to February 1997. In December 1996, the Monitoring Committee (MC) suggested that production-cost analysis be carried out and suitable equipment/technology be adopted for volume production for a competitive product price. CEL was advised to identify and procure the encapsulating material required for completion of the project and for identification of mass production equipment. The project was also extended up to December 1997. No production - cost analysis was carried out by CEL. In the MC meeting of August 1997, CEL expressed its difficulty in procurement of encapsulating material for the product.

In December 1997, CEL formally closed the project without setting up the line for pilot scale production of the component even though it was stated in the completion report that material/component was developed successfully and that the process for producing piezoelectric chips had been standardised. CEL attributed its inability to pack the chips for want of encapsulation equipment/material. CEL stated that no agency/supplier was willing to supply the encapsulating equipment alone. However, the entire grant of Rs one crore including Rs 10 lakh meant for encapsulation equipment and final testing was spent by CEL.

In February 1999, during final evaluation of the project, CEL expressed its inability before Technical Advisory Committee (TAC) to set up a pilot level production for want of encapsulating equipment. No further action was taken in this regard by CEL. Thus pilot scale production of piezoelectric ceramic filers and resonators could not be achieved despite development and standardisation of material component parts.

In response, DSIR stated in August 2000 that pilot production of these components could not be taken up for want of viable encapsulating equipment. Further, due to liberalisation, cheaper imports were available in the market. The reply has to be viewed in the light of the facts that encapsulation was an essential part of the commercialisation process, hence the reply begs the question how the project was cleared without ensuring this essentiality. Efforts towards procurement of suitable packing material were made only after the MC pointed it out in December 1996, a year before the scheduled completion of the project. Further, when efforts at encapsulation failed, no initiative was taken by CEL to develop the equipment on its own as suggested by the MC. The contention that cheaper imports are available due to liberalisation rendering the project unviable apparently is an after thought since liberalised import policy regime was already in place when the project was taken up in March 1995. The fact is that the investment decision was taken without due diligence and considering all the emerging factors. No techno-economic feasibility study was also done before launching the project. This was a case of faulty investment by DSIR.

DSIR stated (September 2001) that CEL was now in a position to commercialise the technology and set up the production facility provided that the encapsulating equipment was procured or developed in India. However, the contention of DSIR has to be viewed in the context of availability of cheaper imports in the market as they have themselves pointed out. Moreover, the objective of productionising ceramic filters and resonators on pilot scale has remained unfruitful.