New Delhi, Oct 23: The Indian government has identified six areas that private companies can bid for in the defence manufacturing space under the Make in India drive — which means replacement of the usual system of tenders and lowest bids — but stakeholders are upset that they can’t participate in more than one sector
Punj Lloyd spokesperson for defence Ashok Wadhawan, President – Manufacturing, echoed the general feeling in the industry when he said: “Our recommendation to the task force (constituted to identify the private players) is that instead of identifying a few companies per sector, the government should form consortiums and award them orders.”
The six sectors identified are aircraft and their major systems; warships of stated displacements, submarines and their major systems; armoured fighting vehicles and their major systems: complex weapons that rely on guidance systems; Command and Control System and critical materials (special alloys and composites).
Defence Minister Manohar Parrikar had said in early September that a task force had been constituted under former Defence Research and Development Organisation (DRDO) chief V.K. Aatre to identify the private players to be permitted into the defence sector. He said it was expected to give its report by month-end.
Parrikar also said there would not be any repetition of players in the six areas.
“There won’t be repetition. If X group has been taken in as a strategic partner in one segment, it will not be considered for another segment. It can participate in partnership for other products,” Parrikar had said.
The deadline for submitting the report has passed and enquiries reveal that it is nowhere near completion. And, it is on the basis of this report that the Defence Procurement Procedure (DPP), which will detail the nuts and bolts of the methodology to be adopted for involving the private sector, was to be drawn up.
“This is not likely to happen before the first quarter of 2016, which means the earliest the private sector can get involved is mid-to-late 2016,” a defence ministry source told, speaking on condition of anonymity, given the sensitive nature of the subject.
Even so, all does not appear to be lost as the coming together of 60 of the best-known defence companies operating in India, both domestic and foreign, could signal the end in its present form of the DRDO, whose roots go back nearly six decades but which has little of substance to show by way of original products.
With defence offsets obligations of Rs. 25,000 crore ($4 billion) expected to accrue over the next seven to eight years, the formation of the Association of Defence Companies in India will see a broad-basing of the country’s manufacturing base, a process that is already underway in the small and medium industries sector
The alliance includes Boeing, Lockheed Martin, Bell Helicopter, Punj Llyod, AgustaWestland, Reliance Defence, the Tatas, Rolls Royce, Saab, Northrop Gruman, Rolta, BAE Systems, Dassault, Honeywell, Thales, Finmeccanica, Hindustan Aerosystems and Merlinkhawk Aerospace.
At a meeting earlier this month, the stakeholders felt the alliance would serve as a representative platform, with a unified voice, on policy matters pertaining to the government, armed forces and state-run enterprises that affect their operations.
This apart, the forum could also promote collaborations, support improved understanding among the members, pursue India’s strategic needs and deal appropriately with the interests of all the stakeholders.
This also means there would be greater interaction between the armed forces and defence manufacturers, something that is sorely lacking now.
This lack of interaction is because the DRDO, defence manufacturers like Hindustan Aeronautics Limited (HAL) and the armed forces (barring the Indian Navy) are functioning in silos, each charting their own course.
Just two instances would suffice here: The Arjun main battle tank (MBT) and the Tejas light combat aircraft (LCA) are still not fully operational after more than four decades of development as their specifications continue to change due to the designers, manufacturers and the users not being on the same page.
The Indian Navy managed to buck the trend because it established its own design organisaiton more than five decades ago and today has under construction not only a 45,000-tonne aircraft carrier – the largest vessel to be built in the country – but also two more nuclear-powered submarines in addition to one that is undergoing sea trials.
Thus, in a situation where the DRDO was established to reduce dependence on imports, India still imports 70 percent of its military hardware.
With the entry of private players, competitiveness will be the new mantra and the DRDO will have to quickly play catch-up or totally lose its relevance.