In­di­geni­sa­tion through co-de­vel­op­ment and col­lab­o­ra­tion

SP's MAI - - NATIONAL AGENDA - By Kishore Ja­yara­man, Pres­i­dent, Rolls-Royce In­dia and South Asia

Char­ac­terised by a high growth po­ten­tial, In­dia’s aero­space and de­fence in­dus­try is im­por­tant to the coun­try’s strate­gic and eco­nomic in­ter­ests. Thus main­tain­ing and ac­cel­er­at­ing growth across aero­space and de­fence is of great im­por­tance to the coun­try’s fu­ture. In­dia ranks among the top 10 coun­tries in the world in terms of mil­i­tary ex­pen­di­ture yet im­ports 70 per cent of its de­fence equip­ment. For In­dia to con­tinue with its mas­sive ac­qui­si­tion pro­gramme to pro­vide its armed forces with the lat­est and best equip­ment in the most eco­nom­i­cal and sus­tain­able man­ner, it needs to ac­tively look into in­di­geni­sa­tion through co-de­vel­op­ment and col­lab­o­ra­tion. This has to hap­pen across the en­tire value chain – from re­search, de­sign and de­vel­op­ment to man­u­fac­tur­ing, in­te­gra­tion, main­te­nance and re­pair. With the in­creas­ing lib­er­al­i­sa­tion of De­fence Pro­cure­ment Pro­ce­dure as well as the fo­cus on ‘Make In­dia’ pro­grammes, there is sub­stan­tial im­pe­tus on pro­mot­ing in­di­geni­sa­tion and cre­at­ing a level play­ing field for the In­dian in­dus­try.

Fo­cus on Re­search & De­vel­op­ment

De­fence tech­nol­ogy comes with huge in­vest­ments in re­search and de­vel­op­ment (R&D). Con­stant im­prove­ments are tak­ing place in the aero­space and de­fence sec­tor and bet­ter tech­nolo­gies are be­ing de­vel­oped around the globe. With In­dia al­lo­cat­ing only 6 per cent of its de­fence budget to R&D vis-à-vis 15 per cent by France and 12 per cent by the US, the coun­try needs to sig­nif­i­cantly in­crease this share to en­sure the de­vel­op­ment and sup­ply of state-ofthe-art de­fence sys­tems. The coun­try’s vast talent pool of en­gi­neers and sci­en­tists should be har­nessed to make it a R&D hub. It also needs to con­sider pro­vid­ing spe­cial tax in­cen­tives to R&D in de­fence and spon­sor­ing R&D projects at pri­vate in­dus­try level to en­cour­age R&D for de­vel­op­ing crit­i­cally ad­vanced tech­nolo­gies.

Raise the Ex­ist­ing FDI Cap

The role of for­eign di­rect in­vest­ment (FDI) in build­ing a do­mes­tic in­dus­try and cre­at­ing an en­abling en­vi­ron­ment for trans­fer of tech­nol­ogy from for­eign OEMs is cru­cial. As in other sec­tors such as au­to­mo­biles, IT and other man­u­fac­tur­ing, there is an ur­gent need to al­low 100 per cent FDI in this sec­tor and ad­dress se­cu­rity con­cerns separately as in most coun­tries. This will even­tu­ally en­able trans­fer of so­phis­ti­cated tech­nolo­gies at a time when the fo­cus of In­dia’s de­fence plan­ning is on in­creas­ing ca­pac­ity to meet the needs of Army, Navy and Air Force, and to es­tab­lish a re­li­able mech­a­nism for in­ter-ser­vice, in­ter-de­part­men­tal and multi-level co­or­di­na­tion.

Boost­ing Sup­ply Chain

Any de­fence pro­gramme suc­cess or fail­ure is be­cause of sup­ply chain ex­e­cu­tion and the In­dian small and medium com­pa­nies can play a crit­i­cal role in the en­tire sup­ply chain for the aero­space and de­fence sec­tor. Large pur­chase or­ders and con­tracts to for­eign OEMs have cre­ated large off­set obli­ga­tions, churn­ing out huge busi­ness op­por­tu­ni­ties for the Mi­cro, Small and Medium En­ter­prises (MSMEs). Off­sets must be strate­gi­cally and proac­tively used as a cat­a­lyst to­wards bring­ing in­vest­ments and tech­nolo­gies into In­dia. The Govern­ment should also con­sider es­tab­lish­ing ded­i­cated spe­cial eco­nomic zones (SEZs) to in­clude com­mon in­fra­struc­ture fa­cil­i­ties for MSMEs and make the coun­try an im­por­tant hub in global sup­ply chain on aero­space and de­fence pro­duc­tion.

Util­is­ing In­dia’s talent pool

In­dia has a large pool of qual­i­fied sci­en­tists and en­gi­neers lever­aged by a grow­ing num­ber of for­eign OEMs who have set up en­gi­neer­ing and de­sign cen­tres. To help the aero­space and de­fence sec­tor jump-start its de­vel­op­ment, it is im­per­a­tive to form mean­ing­ful part­ner­ships with academia or pri­vate in­sti­tu­tions. The na­tion’s ex­ist­ing talent and low-cost base can be lever­aged to at­tain a com­pet­i­tive po­si­tion in de­vel­op­ing next-gen­er­a­tion tech­nolo­gies.

Con­clu­sion

For in­di­geni­sa­tion to be achieved it is im­por­tant for the govern­ment to put in place a con­crete time bound ac­tion plan to not only ‘en­hance’ in­di­geni­sa­tion but to achieve self-re­liance in de­fence within set time frames. Also, In­dus­try’s part­ner­ship with the In­dian Space Re­search Or­gan­i­sa­tion (ISRO) and the Nu­clear Power Cor­po­ra­tion of In­dia Ltd (NPCIL) is a shin­ing ex­am­ple of PPP, which can be em­u­lated by the de­fence and aero­space sec­tors.

IAF’s C-130J air­craft with

Rolls-Royce tur­bo­props

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