Re-energising India’s Defence Sector – RM To Meet Top Industrialists From Defence Sector On Saturday

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Anupama Airy and Tushar Srivastava

As many as 25 leading defence companies from India including Larsen and Toubro, Bharat Forge, Mahindra and Mahindra, Adani, Tata Motors, Ashok Leyland, Dynamatic Technologies Ltd as also foreign defence majors –Lockheed Martin, Boeing, Airbus, BAE, Rolls Royce, Rafael, who are keen to work closely under the government’s “Make in India” initiative for the defence sector will meet Raksha Mantri Nirmala Sitharaman on Saturday morning.

This is first interface of the Indian and foreign defence companies with Nirmala Sitharaman after she assumed charge as the new RM on September 7. The agenda for this meeting is to re-energise the defence sector and resolve issues that are delaying major programs under in the defence sector.

The Industry sees great potential in number of segments. The major programs awaiting fast decision making in land systems for the Indian Army includes artillery systems especially towed and ultra-light guns, armoured vehicles to include upgrades, overhauls, FICV, FMBT, Air defence missiles and gun systems, ATGMs etc; in naval systems – submarines and in air systems includes single engine fighter aircraft, helicopters LUH, NUH etc.

For instance, the FICV—categorised as a ‘Make’ program under the DPP of 2008, is a major milestone in India’s quest for self-reliance in defence and is seen as a significant step in setting up a contemporary defence industrial base in the country.

However, a delay spanning over seven years in initiating this program has been a major concern amongst a large section of the Indian industry as also many global technology providers who forged partnerships and entered into MoUs for developing or providing critical technologies for this program.

Therefore, the foremost requirement from the Indian industry to boost the sector is to compress the procurement decision time lines in order to align or even better the stipulated time lines. What industry urgently requires is that the long pending contracts are awarded to execute orders, rest will fall in place once there is activity in shop floors. The industry feels that at atleast 8-10 make programs be launched every year.

On the policy front several actions have been implemented. This includes the new DPP, the prioritization of acquisition with the highest priority being given to indigenous equipment, launching of make programs, opening of ranges for trial evaluation by private industry, stopping of nomination in shipbuilding, SP policy etc.

According to Baba Kalyani, chairman and managing director of Bharat Forge, the action on operationalisation of these policies has not been as quick. “This is quite evident if we see the number of large orders being placed on the industry. Even on the make front programs like FICV are still not progressing,” he said adding that the real Make in India, will be evident when industry starts investing on receipt of orders and it creates a vibrant Defence Industrial base in the country.

“To achieve faster implementation, we need to kick-start the process by converting the major acquisition programs where trials or negotiations have been completed to Make in India,” said Mr Kalyani.

Mr V S Noronha, vice-president of defence and government business at Tata Motors said in a recent interaction that whilst the government has made announcements to bolster Indigenous Defence Manufacturing, there is a lack of capability in taking decisions and allotting “Make Programmes” such as the FICV.

Programs such as the FICV enable the Indian Industry to partner with International Defence OEM’s for long-term commitments to see products and solutions through multiple generations of evolution.​

In land system besides the FICV, the industry sees great potential in key programmes by the MoD like the FRCV (Future Ready Combat Vehicle), to replace the T-72 battle tank and the FMBT (Future Main Battle Tank), he said​.

Mr J D Patil, whole time director and member of the board, Larsen & Toubro Ltd. and Chairman, FICCI Defence Committee is of the view that Defence sector indigenisation has a potential to create over a quarter million jobs, save 10 to 12 Billion USD in foreign exchange, over the next decade, besides building national capability, capacity to support platform and equipment requirements, across the spectrum of technologies.

As per him, “Make in India” in defence sector is not just an economic compulsion, it is a strategic long term imperative to build the industry base for self-reliance to meet the critical needs of the Armed Forces and become trade surplus in Defence.

“Having brought about a slew of important policy reforms in the last three years, the Govt. has sown the seeds for a strong defence economy to concurrently facilitate enhanced participation of the Private Sector as well as nurture and support the Govt. owned entities. All it needs to do is take a few more bold steps, speed up decision making, de-layer approval stages, and eliminate repetitive process steps, bring in real level playing field, so as to unleash and actively promote indigenization,” said Mr Patil.

He added that implementation of the Public Procurement Policy is the key to uphold the spirit of Make in India, and to ensure that Indian stakeholders get a fair opportunity. To promote serious R&D efforts in this focussed sector, the Govt. can provide requisite encouragement under Strategic Partnership policy and Make policy by offering tax incentives for R&D and product development.

Sharing his views on the Make in India initiative in defence sector, Lt Gen Subrata Saha, former Deputy Chief of Army Staff said the emphasis of the Government on ‘Make in India’ in Defence is quite evident from the several forward-looking policies that have been issued. He said that in order to realise the Government’s intent, there has to be two distinct but concomitant lines of operations designed for the short and medium to long term.

“To begin with the current processes have to be much simplified to enable quicker decision making and execution. All the unutilised or under- utilised policy provisions need to be implemented by simplification and strictly defining timeliness for the process. For the medium to long term the policy has to encourage a shift from the legacy into structures/processes that are smarter and outcome driven,” he added.

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