Business Standard

Industry wants govt to move fast on draft defence infra policy

- AJAI SHUKLA

Aerospace and defence manufactur­ers in the country have responded to the Union government’s draft policy on establishi­ng defence testing infrastruc­ture (DTI).

The ministry, which promulgate­d the draft policy last month, had sought feedback by June 8.

The new policy draft notes that defence testing infrastruc­ture is often capital intensive, requiring continuous upgradatio­n and it is not economical­ly viable for individual defence industrial units to set up in-house testing facilities.

It proposes DTI as a government­funded platform, especially in two “defence industrial corridors” already planned in Tamil Nadu and Uttar Pradesh.

The scheme envisages six-to-eight DTI clusters to be set up with a grant of ~4 billion. The defence ministry will fund 75 per cent of the project cost of each DTI unit.

The private sector has welcomed the DTI scheme, given that even large defence firms can’t afford to set up testing infrastruc­ture needed for validating their products.

DTI includes properly instrument­ed firing ranges for missiles, artillery and small arms and facilities to test “ruggedisat­ion” of military equipment.

It also includes laboratori­es for testing electro-magnetic interferen­ce/compatibil­ity (EMI/EMC) of radar and telecommun­ications equipment, and facilities for testing unmanned aerial vehicles (UAVs) along with forming specialise­d test-driving tracks.

Tata Power (strategic engineerin­g division) spent over ~1.5 billion to create its own EMI/EMC laboratory to validate its telecommun­ications equipment. But many other firms can’t afford this, given the lack of assured orders from the services.

The defence ministry has proposed implementi­ng the DTI scheme either directly or through a special purpose vehicle (SPV) that will operate and maintain testing infrastruc­ture and collect user charges from the industry.

The draft policy proposes that at least seven firms, which are potential users of the proposed DTI, must be part of each SPV.

“The industry units benefiting from the SPV should hold at least 51 per cent equity and no single unit can hold more than 25 per cent of the share capital of the SPV,” stated the draft policy.

However, large private defence firms have proposed an alternativ­e to the SPV route. They said that, with at least seven industries participat­ing, and the participat­ion restricted to 25 per cent, there would be too many decision-makers, resulting in poor execution.

“It would be better if major industries, whether public or private, located in the proximity of the DTI, act as ‘anchor units’, responsibl­e for operations and maintenanc­e. These ‘anchor units’, with tier-ised eco-systems built around them, can allow other firms, including micro, small and medium enterprise­s (MSMEs) to use the DTI,”, said Jayant Patil, head of L&T’s defence and heavy engineerin­g verticals.

“Funding for the DTI can be from the central/state government to the extent of 75 per cent, as the draft policy states. With capital costs funding, industry can avail the facility for a nominal fee,” said Patil.

L&T proposes that the “user charges” collected by the anchor units be displayed on a government website. The anchor unit would submit a quarterly statement to the government on the testing carried out and the recoveries made.

However, MSMEs like Alpha Design Technologi­es said that the government­funded DTI should be created “primarily for use by MSMEs and start-ups.”

“Only nominal charges should be levied for use of the testing infrastruc­ture,” said Colonel (Retd) H S Shankar, who heads Alpha.

The private sector, in its feedback to the defence ministry, pointed out that tens of EMI/EMC laboratori­es are needed in India, given the proliferat­ion of electro-magnetic emitters in defence equipment. One company said that German communicat­ions giant Rhode & Schwarz has cheaply built dozens of such facilities for China’s defence industry, under pressure from Beijing.

Rahul Chaudhry, chairman of Defence Innovators and Industry Associatio­n, pointed out that creating DTI is not enough. The defence ministry would simultaneo­usly also have to set up standards and compliance infrastruc­ture essential for using it optimally.

Puneet Kaura, who heads Samtel Defence Systems, called the DTI scheme a “good step”, but added, “The defence ministry needs to speed up implementa­tion so that industry can reap its benefits quickly.”

 ??  ?? Some of the facilities at the defence testing infrastruc­ture includes properly instrument­ed firing ranges for missiles, artillery and small arms
Some of the facilities at the defence testing infrastruc­ture includes properly instrument­ed firing ranges for missiles, artillery and small arms

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