De­fence PSUs — Still High on Im­port

Pref­er­ence is be­ing given to in­dige­nously de­signed de­fence equip­ment and pro­cure­ment from for­eign ven­dor is done only when In­dian in­dus­try is not in a po­si­tion to de­liver the equip­ment within req­ui­site time­frame

SP's LandForces - - FRONT PAGE - RO­HIT SRI­VAS­TAVA

Pref­er­ence is be­ing given to in­dige­nously de­signed de­fence equip­ment and pro­cure­ment from for­eign ven­dor is done only when In­dian in­dus­try is not in a po­si­tion to de­liver the equip­ment within req­ui­site time­frame. Ro­hit Sri­vas­tava

IN SPITE OF MAS­SIVE push for ‘Make in In­dia’ in de­fence, the per cent of for­eign con­tent in the de­fence items pro­duced by pub­lic sec­tor re­mains high. Stand­ing Com­mit­tee on De­fence in its lat­est re­port tabled in De­cem­ber showed con­cerns over the pre­vail­ing sit­u­a­tion and noted that they should ‘leave no stone un­turned’ in de­liv­er­ing lat­est equip­ments to forces within a fixed time frame­work with re­duced for­eign con­tent.

“In case of the Hin­dus­tan Aero­nau­tics Lim­ited (HAL), the im­port com­po­nent is said to range from 44 to 60 per cent; 36 to 44 per cent in case of equip­ment man­u­fac­tured by Bharat Elec­tron­ics Lim­ited (BEL) and al­most 20 per cent in case of equip­ment man­u­fac­tured by Bharat Earth Movers Lim­ited (BEML), from 2013-14 to 2015-16.”

“Fur­ther, the im­port com­po­nent of Ships man­u­fac­tured by the Hin­dus­tan Ship­yard Lim­ited (HSL) is in­formed to be 21 per cent in 2016-17; 14.51 to 35.50 per cent for ships pro­duced/de­liv­ered by Goa Ship­yard Lim­ited (GSL) and 28 to 58 per cent in case of Ships man­u­fac­tured by the Mazagon Dock Ship­builders Lim­ited (MDL). Ord­nance Fac­tory Board’s im­port con­tent dur­ing the last three fi­nan­cial years stands at 8.9 per cent to 15.15 per cent,” Stand­ing com­mit­tee said in its thirty sixth re­port to the par­lia­ment.

“De­fence equip­ment is be­ing im­ported from var­i­ous coun­tries as per the op­er­a­tion re­quire­ment of Armed Forces. Dur­ing the last two fi­nan­cial years (2014-15 and 2015-16), 108 con­tracts with to­tal value of 1,12,736.81 crore have been signed for cap­i­tal pro­cure­ment of de­fence equip­ment, out of which 73 con­tract in­volv­ing a value of 72,303.34 crore were signed with In­dian ven­dors and 35 con­tracts in­volv­ing a value of 40,433.47 crore were signed with for­eign ven­dors,” it added.

Ac­cord­ing to the re­port, De­fence Sec­re­tary has can­didly ad­mit­ted that heavy de­pen­dence of Air Force on for­eign equip­ment is due to the lack of req­ui­site so­phis­ti­cated equip­ments in our coun­try.

Govern­ment, in its re­sponse to the com­mit­tee, said that pref­er­ence is be­ing given to in­dige­nously de­signed de­fence equip­ment and pro­cure­ment from for­eign ven­dor is done only when In­dian in­dus­try is not in a po­si­tion to de­liver the equip­ment within req­ui­site time­frame.

“Dur­ing 2016-17 and in cur­rent fi­nan­cial year (up to April 30, 2017), the Govern­ment has ac­corded ap­proval to 34 cap­i­tal pro­cure­ment cases at an es­ti­mated cost of

1,02,338.45 crore out of which 23 AoNs (Ac­cep­tance of Ne­ces­sity) at a es­ti­mated cost of 96,466.25 crore value are un­der the ‘Buy (In­dian)’, ‘Buy In­dian – In­dige­nously De­signed De­vel­oped and Man­u­fac­tured (IDDM) and ‘Make’ cat­e­gories,” the re­port said.

As per the re­port, HAL has man­u­fac­tured 14 air­crafts un­der Tech­nol­ogy of Trans­fer (ToT) and has de­signed and de­vel­oped 17 dif­fer­ent types of air­crafts in­clud­ing en­gines and un­manned aerial ve­hi­cle and is mak­ing con­certed ef­forts to in­di­g­e­nize com­po­nents, ac­ces­sories and sys­tems re­quired for man­u­fac­tur­ing and main­te­nance of air­crafts and their sub­sys­tems. In ad­di­tion, ev­ery year HAL is in­di­g­e­niz­ing more than 2,000 items and so far more than 600 types of line re­place­able units have been in­dige­nously de­vel­oped for var­i­ous plat­forms.

HAL has pro­posed for man­u­fac­tur­ing of over 270 spares items of Su-30 MKI air­craft to be man­u­fac­tured in In­dia by pri­vate com­pa­nies un­der ToT from Rus­sian orig­i­nal equip­ment man­u­fac­tur­ers. “To­day, over 2,300 ven­dors are sup­port­ing HAL in terms of com­po­nent man­u­fac­tur­ing, tool­ing, sub-as­sem­bly and de­sign and devel­op­ment,” it said.

The re­port in­forms that the Bharat Elec­tron­ics Lim­ited, man­u­fac­turer of strate­gic elec­tron­ics sys­tems in­clud­ing radars, gen­er­ates around 85 per cent of its rev­enue from in­dige­nous tech­nol­ogy. The com­pany has three tier re­search and devel­op­ment setup and is also es­tab­lish­ing an in­no­va­tion cen­ter at Ben­galuru, with larger in­fras­truc­ture and re­sources. In next five years, BEL has plans to re­duce the im­port con­tent in its sales to 19 per cent from ex­ist­ing 23 per cent.

Sim­i­larly, the im­port con­tent in the prod­ucts of Bharat Dy­nam­ics Lim­ited in last three years is around 14 per cent and for the same pe­riod im­port con­tent for the Mishra Dhatu Nigam Lim­ited (MIDHANI) hov­ers around 30 per cent.

In­dian de­fence ship­yards which are sup­pose to be at the fore front of in­di­geni­sa­tion in de­fence, but the re­port doesn’t paint a rosy pic­ture. As per the re­port, Kolkata- based Gar­den Reach Ship­builders and En­gi­neers, in terms of in­dige­nous con­tent is best among de­fence ship­yards, has di­rect im­port con­tent for its ships are in tune of seven per cent of the value of pro­duc­tion.

On the other hand the GSL has reached in­di­g­e­niza­tion level to 64 per cent in on­go­ing projects. “In new 5 CGOPV (Coast Guard Off­shore Pa­trol Ves­sel) project, ef­forts are to be in­crease in­di­g­e­niza­tion level to 70 per cent by in­creas­ing the lo­cal con­tent fur­ther,” re­port added.

The im­port con­tent in the Hin­dus­tan Ship­yard Lim­ited de­liv­ered ships in 201516 was 27 per cent which has come down to 13 per cent in last fi­nan­cial year, a sub­stan­tial achievement. On the other hand MDL, well known for build­ing Kal­vari class (Scor­pene) sub­ma­rine, has 49 per cent (in terms of value of pro­duc­tion) im­port con­tent in its prod­ucts – around 13 per cent in­crease in last five years.

The re­port as­cribes this neg­a­tive trend “to the pro­cure­ment of high value items nom­i­nated by DCNS, France (col­lab­o­ra­tor), im­ported for P75, Scor­pene class sub­ma­rine project un­der Trans­fer of Tech­nol­ogy con­trac­tual agree­ment.”

Ac­cord­ing to re­port, Ord­nance Fac­tory Board has 12 task forces to achieve the ob­jec­tive of in­di­geni­sa­tion in a time bound man­ner. In last three years, board has re­duced the for­eign con­tent to around 12 per cent from 15 per cent.

The re­port does give an idea of the way things are but most cer­tainly the fine pic­ture could be dif­fer­ent as many of the lo­cally pro­cured prod­ucts could ei­ther have for­eign con­tent or are be­ing man­u­fac­tured through im­ported tech­nol­ogy where the level of tech­nol­ogy ab­sorp­tion will be very dif­fi­cult to as­cer­tain. It’s been al­most two decades since govern­ment opened the de­fence sec­tor to pri­vate play­ers to in­crease the pro­duc­tion ca­pac­ity as the pub­lic sec­tor were fail­ing to de­liver lo­cally de­vel­oped weapons sys­tem.

But the pic­ture has not im­proved much. The pri­vate sec­tor is still far from de­liv­er­ing lo­cally de­signed and de­vel­oped weapon sys­tem and the pub­lic sec­tor in spite of con­tin­ued gov­ern­men­tal sup­port has not changed. It is time to re-eval­u­ate the ‘Make in In­dia’ pro­gramme as merely num­bers is not the story of in­di­geni­sa­tion, the real story is who owns the core tech­nol­ogy and how ca­pa­ble are In­dian firms in de­vel­op­ing core tech­nol­ogy for prod­ucts be­ing man­u­fac­tured through ToT.

The pro­ce­dures and poli­cies need to be re­vised to seal the loop­hole which al­low the In­dian man­u­fac­tur­ers to con­tinue with the non de­liv­er­ance in terms of tech­nol­ogy. Govern­ment must come with a pol­icy to en­sure com­pa­nies in­vest in re­search and hu­man re­source so that they have the re­quired ca­pa­bil­ity for tech­nol­ogy ab­sorp­tion and re­verse en­gi­neer­ing. Although, de­fence man­u­fac­tur­ers – both pub­lic and pri­vate – pro­fess to de­velop tech­nol­ogy but only time will tell whether they will come up with next gen­er­a­tion prod­ucts in com­ing years or not. This should be the only pa­ram­e­ter to eval­u­ate the in­di­geni­sa­tion num­bers.

Although, de­fence man­u­fac­tur­ers – both pub­lic and pri­vate – pro­fess to de­velop tech­nol­ogy but only time will tell whether they will come up with next gen­er­a­tion prod­ucts in com­ing years or not. This should be the only pa­ram­e­ter to eval­u­ate the in­di­geni­sa­tion num­bers.

PHO­TO­GRAPH: SP Guide Pubns

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