“By 2025, we aim to bag a spot in the Top 5 global de­fence man­u­fac­tur­ing hubs”

Electronics Bazaar - - Contents -

To delve deep into the ob­jec­tives of the draft De­fence Pro­duc­tion Pol­icy 2018, we pur­sued the ex­pert him­self. On a scorch­ing sum­mer af­ter­noon, the ed­i­to­rial team of Elec­tron­ics Bazaar made its way to an of­fice within the Min­istry of De­fence (MoD) at New Delhi, and had a can­did con­ver­sa­tion with Dr Ajay Kumar,

sec­re­tary, MoD, who gave us an in­sight into the draft pol­icy and ex­plained how In­dia is set to make a mark at the global level. The ex­cerpts fol­low…

EB: The draft De­fence Man­u­fac­tur­ing Pol­icy 2018 is ex­pected to en­able in­dige­nous pro­duc­tion. Kindly share your views on this.

The whole idea of the pol­icy is to make In­dia one of the top five de­fence man­u­fac­tur­ing hubs in the world. Un­der the new de­fence pro­cure­ment pro­ce­dure, there are spe­cific pro­vi­sions to fos­ter the growth of the in­dige­nous de­fence in­dus­try. There are var­i­ous strate­gies in the pol­icy, which will guide us on how this goal can be achieved. PM Naren­dra Modi has said that sys­temic changes and the de-no­ti­fi­ca­tion of some reg­u­la­tions are to be made to en­sure that MSMEs and ord­nance fac­to­ries grow ef­fi­ciently. The goals stated in the draft pol­icy are achiev­able if an ad­e­quate bud­get is made avail­able and bot­tle­necks are re­moved. How­ever, build­ing an in­dus­trial ecosys­tem is our top pri­or­ity.

EB: While the pol­icy prom­ises to sub­stan­tially in­crease FDI in In­dia, will it pro­vide any ben­e­fits to A&D man­u­fac­tur­ers in In­dia’s pri­vate sec­tor?

The rules re­gard­ing FDI in the In­dian de­fence sec­tor cur­rently per­mit for­eign com­pa­nies to own 49 per cent of In­dian units. The de­ci­sion to lib­er­alise FDI in the de­fence sec­tor has given a boost to de­fence pro­duc­tion un­der the ‘Make in In­dia’ ini­tia­tive.

How­ever, higher FDI is just one of the strate­gies. The whole idea is to en­cour­age the pub­lic sec­tor as well as the pri­vate sec­tor in the coun­try. So, apart from giv­ing im­por­tance to FDI, we also want to en­cour­age both these sec­tors. It is the growth in all three – FDI, the pri­vate sec­tor and the pub­lic sec­tor – that will help in cre­at­ing the right ecosys­tem.

EB: With re­gard to AI, IoT, cy­ber space, etc, which of these lat­est tech­nolo­gies do you be­lieve will see large scale im­ple­men­ta­tion in mod­ern A&D pro­duc­tion?

Ev­ery­thing is slowly com­ing closer to ar­ti­fi­cial in­tel­li­gence (AI), as AI is be­com­ing as all-per­va­sive as the In­ter­net it­self. AI us­age in de­fence sys­tems varies from case to case. You can see that UAVs (un­manned aerial ve­hi­cles) are now one form of AI. Robots are be­ing used by the armed forces, which is an­other form of AI. This a very fast-evolv­ing area and I be­lieve a lot will hap­pen here in the fu­ture; so In­dia also needs to be pre­pared to take ad­van­tage of this trend. We should not get left be­hind in this race, while other coun­tries take the lead.

At present, our IT in­dus­try is quite strong, although we need to do more in AI. So we have set up a task force com­pris­ing mem­bers from in­dus­try, the gov­ern­ment, the de­fence sec­tor and from academia. We have cho­sen N. Chan­drasekha­ran, the chair­man of Tata Sons, to head the task force be­cause it is es­sen­tial we work closely with the in­dus­try to im­ple­ment AI in the de­fence sec­tor.

EB: How do you think In­dian play­ers are gear­ing up to face the po­ten­tial cy­ber threats that could im­pact the elec­tronic sys­tems in the A&D space?

Cy­ber se­cu­rity is adding fur­ther chal­lenges in the AI do­main and, un­der the IT Act, var­i­ous steps have been taken. All our forces are tak­ing var­i­ous pre­cau­tion­ary mea­sures to en­sure that any kind of cy­ber threat can be con­trolled.

EB: The MoD is work­ing to­wards get­ting quick ap­provals from the Min­istry of Home Af­fairs (MHA) for de­fence projects. Kindly elab­o­rate.

The role of the gov­ern­ment is very im­por­tant in the de­fence man­u­fac­tur­ing sec­tor. This is be­cause, first of all, it is the gov­ern­ment that grants li­cences to the de­fence man­u­fac­tur­ers and ex­porters. Sec­ond, in In­dia, the gov­ern­ment is also the big­gest buyer of the sys­tems produced. We are try­ing to build a de­fence ecosys­tem in the coun­try. Speed­ing up the process of grant­ing li­cences to de­fence projects is a part of that ef­fort. The Min­istry of Home Af­fairs and the De­part­ment of In­dus­trial Pol­icy and Pro­mo­tion (DIPP) have been work­ing closely with us. Re­cently, sev­eral ap­pli­ca­tions to man­u­fac­ture small arms got MHA ap­proval within a short span of time, due to the proac­tive re­sponse from the min­istry. Go­ing for­ward, we in­tend to con­tinue at a sim­i­lar pace.

EB: How will the growth of the A&D in­dus­try help In­dia be­come a global man­u­fac­tur­ing hub?

In­dia will try to be­come a global man­u­fac­tur­ing hub for A&D by 2025. In fact, some would say we are al­ready a sig­nif­i­cant de­fence and aero­space man­u­fac­turer. Our do­mes­tic A&D man­u­fac­tur­ing turnover is in the range of about ` 700 bil­lion to ` 750 bil­lion, and this num­ber is ex­pected to go up to ` 1700 bil­lion in the next five years or so.

With In­dia be­ing the world’s fastest grow­ing civil avi­a­tion mar­ket, there is a tremen­dous op­por­tu­nity to lever­age the aero­nau­tics in­dus­try here. HAL, which al­ready of­fers sev­eral he­li­copters, fighter jets and other air­craft for the de­fence sec­tor, has re­leased its ad­vanced light he­li­copter (civil) for com­mer­cial ex­ploita­tion with pri­vate sec­tor part­ners. The Dornier 228, a 19-seater air­craft, which is per­fect for re­gional con­nec­tiv­ity, has re­ceived DGCA clear­ance for com­mer­cial

op­er­a­tions. Even the ae­ro­com­po­nents in­dus­try is get­ting more glob­ally in­te­grated with com­pa­nies like Lock­heed Martin, Boe­ing and Air­bus, among other firms, sourc­ing from In­dia. The de­vel­op­ment of the civil and de­fence aero­nau­tics mar­ket has tremen­dous po­ten­tial. The draft De­fence Pro­duc­tion Pol­icy refers to de­vel­op­ing a 90-seater plane for re­gional con­nec­tiv­ity, and also set­ting up an aero­nau­ti­cal univer­sity.

EB: In your opin­ion, what are the cur­rent ob­sta­cles to In­dia’s progress to­wards this goal?

There are cer­tain ob­sta­cles that we are try­ing to ad­dress in this draft pol­icy. We in­tend to fo­cus more on ease of do­ing busi­ness, en­cour­age greater par­tic­i­pa­tion of pri­vate play­ers, lever­age our IT strength fur­ther, lever­age our friends in civil avi­a­tion, etc. Tra­di­tion­ally, we have not fo­cused on ex­ports. To be­come a global hub in the true sense, In­dia needs to start ex­port­ing. So, all this put to­gether will help In­dia achieve its aim of rank­ing among the Top 5 de­fence man­u­fac­tur­ing hubs in the world.

EB: What would your advice be to play­ers in the pri­vate and pub­lic sec­tor, re­gard­ing the ‘Make in In­dia’ mis­sion?

Ear­lier, we wit­nessed the open­ing up of the broad­cast­ing, the civil avi­a­tion and the tele­com sec­tors. Now the de­fence sec­tor is open­ing up, and that is a huge op­por­tu­nity for ev­ery­one. The size of the cake is in­creas­ing. The pri­vate as well as the pub­lic sec­tor have im­mense op­por­tu­ni­ties to grow in this sec­tor.

EB: What are the gov­ern­ment’s im­me­di­ate plans to en­cour­age more pri­vate sec­tor par­tic­i­pa­tion in the A&D space?

The gov­ern­ment aims to im­prove the ease of do­ing busi­ness, pro­mote ex­ports, in­crease the level of in­dige­nously made aero­space com­po­nents in the OEM in­dus­try, and lever­age our strength in IT. These are some of the key ac­tiv­i­ties on the gov­ern­ment’s agenda to boost the num­ber of pri­vate play­ers in the de­fence sec­tor.

To boost de­fence pro­duc­tion in the coun­try, Prime Min­is­ter Modi has an­nounced the move to es­tab­lish two de­fence in­dus­trial cor­ri­dors in the coun­try. Both de­fence cor­ri­dors, one in Tamil Nadu and the other in Ut­tar Pradesh, will utilise re­sources to de­velop de­fence man­u­fac­tur­ing ecosys­tems in the re­gion. The cor­ri­dors will be­come the en­gines of eco­nomic de­vel­op­ment in both the re­gions.

EB: How cru­cial will star­tups be in this do­main?

They will play a very im­por­tant role. Aim­ing to give an im­pe­tus to star­tups, the prime min­is­ter launched the In­no­va­tions for De­fence Ex­cel­lence (IDEX) scheme on April 12, this year. Un­der this scheme, in­no­va­tion hubs, in the de­fence sec­tor, will be set up across the coun­try. The pur­pose of the scheme is to in­cu­bate ideas and pro­vide sup­port through in­fra­struc­ture, for de­fence re­lated star­tups.

EB: Do you think In­dia’s hard­ware de­vel­op­ment in­fra­struc­ture is ad­e­quate for such am­bi­tious goals?

I feel the In­dian hard­ware sec­tor is grow­ing very fast. A lot of new in­vest­ments are com­ing in. New ca­pa­bil­i­ties are get­ting es­tab­lished in the ESDM sec­tor. Bharat Elec­tron­ics has got tremen­dous ca­pa­bil­i­ties. But we need to im­prove and be a tech­nol­ogy provider, and not a tech­nol­ogy re­cip­i­ent. Star­tups can help us achieve that goal.

EB: What reg­u­la­tions has the gov­ern­ment made for strict qual­ity con­trol in the A&D in­dus­try?

Re­cently, to en­sure strict qual­ity con­trol in the aero­space sec­tor, Hin­dus­tan Aero­nau­tics Ltd (HAL) has in­tro­duced third party cer­ti­fi­ca­tion. We are also look­ing at how we can pro­mote ex­ports by ex­plor­ing how our de­fence man­u­fac­tur­ing com­pa­nies can use the NATO cod­i­fi­ca­tion sys­tem for de­fence equip­ment. This will help In­dian firms ex­port more eas­ily. We are try­ing to align our over­all qual­ity con­trol and stan­dard­i­s­a­tion mech­a­nisms with the best prac­tices in the world

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