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Defence Procurement exercise will start yielding results next year onwards

Updated: December 29, 2016 4:26 pm

‘Make in India’ is one of the areas where media generally does not make controversy. I always think aloud. I am a sort of person, who likes to throw ideas into the public and listen to them. But now a days it seems quite dangerous, but Make in India is an initiative where I can freely share ideas.

FDI in Defence does not come overnight. ‘Make in India’ is an important aspect. A number of steps has been taken by the government in the defence sector, like removing a number of items from the exports list from the aviation sector. For the defence license, all those which are manufactured under this (aviation) category, which were actually defence exports are now not categorised as defence exports.

 In defence, we spent about 3 lakh 43 thousand crores and prepared ourselves for eventual events.  The amount allocated to defence is to prepare for events that a country will always wish that it never happens. When preparing for such eventualities a nation should never depend on a third party for our basic requirements, that is arms, ammunitions and all gadgetry; it is here that indigenous production assumes importance. One should remember that India had to prepare for eight months before going into war in 1971, because the country probably did not have the capability to produce many of the required consumables.  Such a situation could have been avoided if India was self-reliant  in its defence production. If you are really spending so much money then why not make effort to ensure that more or less you can be self sufficient. 100 per cent may not be possible  as there are complex platforms such as  Boeing, there will be ecosystem of supply. Even sometime it is economically not viable, number of quantity of items, it is better to get  themfrom abroad. But your reliability depends on Make in India and local availability. It will ensure development, employment and more skills.  Make in India will give indigenous products the much needed local support. This will, in turn,  bring more to research and development in the field and bring in the most important factor of reliability.

Defence can generate concepts and ideas for public security prodcts. Why can’t we repeat the success of auto industry in the defence sector? I believe we can.  Export is one area, where Government of India is focusing.  Defence Procurement Procedure in which for the first time the government had included a clause stating that the articles of the agreement should be respected enabling the private investors to have a level playing field.

People ask why the government cannot clear defence deals in haste. If you don’t go through the fine print, we will end up buying 272 fighters without any real transfer of technology. How do you explain that? India has purchased 272 Su-30 MKI fighters from Russia. The deal was signed in 2000 between the two countries to license manufacture 140 aircraft at the Hindustan Aeronautics limited. As for the inability of the public sector to absorb technology, there are so many products that we have developed. The HAL is manufacturing so many products. Then why are they facing problems in commercial production of light Combat Aircraft?  I had carried out a series of meetings to thrash out internal difference as even after trials it was not going further. Because they were thinking in silos.  The government last month cleared a proposal for the purchase of 83 HAL manufactured light

Combat Aircraft Tejas for the Indian Air Force with full weaponry and active electronically scanned array radars. In many defence procurement cases, competitors wrongly accused the winning  bidder of malpractices just to delay signing of deals.

The exercise undertaken by the government in terms of defence procurement will start yielding results from next year onwards. In defence procurement we have planted some grafts, which I expect to produce result, but even there you have to wait for 2-3 years, now two years are over and probably 2017 is a year where whatever exercise has been carried out will start yielding results.  Most of the issues pertaining to defence procurement procedure are being gradually sorted out. I am still clearing the mess of the earlier government, I do not intend to point finger, this is not for blame game, but till now there were so many errors, mistakes, casualness that  things have gone in cycles and cycles. Slowly, but surely, these issues are getting sorted out and I am very sure that we will make it as the road ahead is very clear.

If we properly assess the requirement of defence forces, we can make many of the changes happen.  Industry should come out with clear recommendations. We expect that while we will also change DPMs (Defence Procurement Manuals) and OFB (Ordinance Factory Board) very soon into IDDM (Indigenously Designed Developed and Manufactured) concept, slightly differently put up, but at the same time we will expect that the biggies in the private sector also spread requirement to the small and medium industries. There is a definite improvement, the percentage of small and medium industry contribution was around between 9 per cent in OFBs and about 14-15 in PSUs, today it has crossed 20 and is at an average of about 29 per cent in MSME (micro, small and medium enterprises) sector.

Economy is dependent on security


The government and government departments like the ordinance factories and public sector units play a major role in encouraging the development of indigenous products. The growth story to be a success, there needs to be the active participation of the private sector.

In a patriotic discharge of duties, it is not just the government but the people have an important role to play. For this, the private sector should partner with the government in the coming years.

Muralidhar Rao, (National General Secretary, BJP)

DPSUs are concentrating on high-valued items


We need to indigenize defence products in order to become self-reliant. We need to focus on Make in India for Foreign Direct Investment (FDI) and also a good amount of innovation is required for it. Without industry participation, we could not make defence production indigenized. Aakash Missiles production is a good example of amalgamation of government and private industries. Although Bharat Dynamics Limited produces it, its 83 per cent of the items come from private industries. DPSUs are concentrating on high-valued items.  Defence test facilities are opened for eligible private industries. Now, private industry can test and evaluate their system. A technology development funds need to be created wherein experts know and have capabilities to develop new products and equipments. Innovation ideas are essential, and industry needs to convert it into innovative products. Ministry of Defence (Mod) is working on defence innovative research initiatives, where MoD will invest to innovative ideas to convert into products. We need to compete with world market. Defence Procurement Policy 2016 has given top most priority to Indigenously Designed and Developed Manufactured (IDDM) items before going to any other mechanism and methodologies. Make in India’s final goal must be IDDM products. Only domestic market is not sufficient for the survival of private industries, so we need to look into ‘Beyond’. We need to export the state-of-art technologies. We need to develop technology better than advanced nations. So academia, DPSUs, research Institutes and private industries, all need to redefine their roles.

G. Satheesh Reddy, Scientific Advisor to Raksha Mantri

 Ours is a comprehensive, ‘bottoms up’ approach


The role of offset to catapulting Indian industry into global supply  chain  is very important. Indeed offset is a very vital catalyst. It helps many of our small and medium industries to get into global supply chain for defence manufacturing. Currently Boeing has 30 direct and over 130 indirect suppliers from India. The most prominent example is the Tata-Boeing joint venture, based out of Hyderabad, which will start supplying the fuel fuselage for the Apache helicopters. We are not just aiming to supply fighters but also make India one of the most important parts of the global supply chain, supporting the Make in India programme. This strategy of creating an eco-system in support of Boeing’s global plans, is the strongest point in Boeing’s pitch for making a twin engine fighter plane in India. Although the Indian Ministry of Defence is yet to open its cards on that front, Defence Minister Manohar Parrikar had indicated in June earlier this year that India is planning to ‘develop one or two make in India fighter programmes.’ Ours is a comprehensive, ‘bottoms up’ approach, in which we will not only scout for Indian players in composites and precision engineering but also develop a manpower pool of skilled workers, matching the best in the world.

Pratyush Kumar, President, Boeing India

Vice President, Boeing International

For India’s defence public sector undertakings (DPSUs) to remain competitive, good material can be got at a cheaper price. Why should advance be paid, except where development and small scale industry is involved?

Why one should restrict oneself?  One should ask for best quality at cheapest rates. I am not going to give advance if I can get good material at credit. Why should I pay advance to another company? In case of high-technology item, the policy has to be different.

If it is developed, and things are manufactured and supplied by small industry, the policy has to be different.  We are working on it;  that is why some time is being taken, but when it comes out it will be much better manuals. These manuals are being worked because now a lot of things has been eliminated,  so now there are very few things, but critical issues are remaining.

There are more issues in offset like skill development, if it should be outsourced to a competent agency, and if it can be used for venture capital. These are questions we are answering and will be replying to them very soon but I think all these aspects are now limited to 4-5 pointed issues  in industry can give suggestion on them.

(Excerpts from speech delivered at National Conference on Defence Production-Self Reliance and Beyond)

 by Manohar Parrikar

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