Make in India: A huge but doable task

  • Rahul Singh, Hindustan Times, New Delhi
  • Updated: Feb 17, 2015 18:18 IST

It is touted as the crown jewel of India’s defence sector. But 13 years after it was inducted, the indigenously-made Dhruv advanced light helicopter has lost its sheen because of a string of fatal crashes.

Concerns mounted when two army pilots were killed last week after their India-made utility helicopter crashed in Kashmir, barely two weeks after the Ecuadorian Air Force lost its fourth India-supplied Dhruv to a training accident.

The crashes have cast a shadow over India’s capability to deliver world-class military platforms at a time when Prime Minister Narendra Modi’s Make in India slogan has generated a buzz worldwide and will also be the theme of the upcoming Aero India air show at Yelahanka, outside Bangalore, from February 18-22.

With his Make in India campaign, Modi has ushered in a new chapter of hope that India has the potential to not only shed the tag of being the world’s biggest importer of weapons but also emerge as an export powerhouse. New Delhi spent `83,458 crore on importing weapons during the last three years.

In the spotlight

All eyes are on India as it takes baby steps towards carving out its own space in the brutally competitive world of arms trade. Modi will make an aggressive pitch for the campaign when he inaugurates the biennial air show on Wednesday, an event that will be attended by 620 firms from more than 30 countries.

The odds are stacked against India – it imports 65% of its military requirements, the domestic defence sector is struggling to come of age and foreign suppliers doubt its capability (French aviation giant Dassault Aviation is unwilling to take responsibility for Rafale fighters to be built in India).

India-built Sukhoi-30 fighters have been involved in fatal mishaps, the induction of light combat aircraft is way behind schedule and delay in development of intermediate jet trainer by Hindustan Aeronautics Limited (HAL) has compromised pilot training.

Measured optimism

Yet, Modi’s pet project inspires optimism in India, and across the globe. Industry experts feel India can pull it off with unflinching support from the government, policies aimed at increasing ease of doing business, scaling up research and development infrastructure and harnessing the strengths of the public and private sector.

“The focus has to be on areas that make economic sense and where India is really competitive. India has good engineering talent and skills in the software sector. That’s a good place to start,” said Pratyush Kumar, who heads US aerospace major Boeing’s business in India.

The immediate lure for foreign suppliers may be tapping the Make in India opportunities by partnering with domestic players to produce next-generation submarines, light utility helicopters, artillery guns, minesweepers, missiles and other military hardware with Indian players. India is poised to spend $250 million on new weapons over the next 10 years.

Making for the world

But Modi’s Make-in-India vision goes beyond that – it’s Make in India for the world.

Antoine Caput, who heads French defence major Thales in India, said, “Initiatives such as Make in India and lifting the cap on FDI (to 49%) will help us develop global supply chains involving Indian vendors. We will partner in building local capabilities to cater to the world market.”

But that will be no instant coffee. Quick decision-making and tweaking policies to build the right ecosystem to do business will be critical.

Yves Guillaume, president India, Airbus Group, said, “We need to be clear that this transformation cannot happen overnight. The government has to plan a gradual ramp-up in terms of capabilities, both in the public and private sector, while involving the private sector in a more active way.”

Hurdles ahead

The road ahead is riddled with hurdles. The government will have to deal with demands to fine-tune its offset policy (it requires foreign vendors to re-invest 30% of contracts valued more than `300 cr in the Indian defence sector) and the debate over lifting the FDI cap further will also rage on.

Kumar said the period for implementing offset contracts should be at least 10 years.

“It is currently co-terminus with the main contract and ranges from 5 to 7 years. This forces us to do simpler things,” he said.

Foreign suppliers are also hoping to get controlling stake in the joint ventures they forge. “FDI hike to 49% is a welcome step but this has to be seen as a means to an end, not the end itself,” said Guillaume.

On Dhruv crashes, former IAF chief Air Chief Marshal Fali Major said the chopper’s questionable safety record could undermine the Make in India campaign. “We need to wake up and put things in order.”

Tomorrow - Part 2: Make-in-India push could hit tech transfer hurdle

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