Competition between the public and the private sector is heating up for grabbing a bigger slice of the Make in India pie. The public sector’s monopoly over defence production appears to be under threat, with private players asserting they can perform better if the government levels the playing field.
It is too early to bet on whose contribution will be more significant in unshackling the potential but the rivalry is already playing out. It will get fierce as foreign suppliers scout for Indian partners to execute lucrative orders.
Nikhil Gandhi, chairman, Pipavav Shipyard, was bullish about the prospects of the private sector and its ability to take on state-run units. “We are more competitive and we can negotiate better,” Gandhi told HT.
Foreign vendors are eyeing contracts worth more than `1,00,000 crore for building submarines, planes, helicopters, artillery guns and missiles in India.
Public sector players are a strict no-no for some foreign supplies. Textron plans to bid for two types of military helicopters in India but it will do so only in partnership with a private player.
“Absolutely, we will partner with a private firm. The public sector just can’t keep up with the pace,” said Inderjit Sial, president, Textron India Private Limited.
But there are other suppliers who are equally comfortable doing business with the public and private sector, depending on the equipment or systems they are stitching up partnerships for.
John Brosnan, managing director, India & South East Asia, BAE Systems, said, “Our experience with some of key Indian industry participants - Hindustan Aeronautics Limited on the Hawk advanced jet trainer, Mahindra with whom we had a land systems joint venture and BEL on the tactical communications sys tem - makes us confident that the Indian industry is ready.”
The private sector is being backed by the government. Amitabh Kant, secretary, department of industrial policy and promotion, the nodal agency executing Make in India, believes private players can dent the public sector’s dominance of the defence landscape if given equal opportunities.
“The private sector has the potential to streak ahead in the Make in India race in the coming years. It needs to be involved in more projects,” Kant told HT.
Organisations like the Defence Research and Development Organisation (DRDO) and state-owned HAL are on shaky ground due to delays and cost overruns in military programmes.
The Comptroller and Auditor General (CAG) had last December slammed defence PSU Bharat Earth Movers Limited over its failure to indigenise heavy-duty Tatra trucks used for carrying missiles, a target that should have been accomplished 25 years ago.
Former HAL chief RK Tyagi, however, doesn’t believe the public sector will yield ground to the private players. “The industry is like a train. The DRDO, HAL and other PSUs are the engine powering it, while the private players are like bogies. They are useless without each other,” he said.
Last week, Reliance Group, headed by Anil Ambani, announced its entry into the defence manufacturing sector. With names like Mukesh Ambani, Mahindra, Tata and L&T already in the fray, the public sector has no choice but to reinvent itself.