De­fence Min­is­ter urges de­fence PSUs & ord­nance fac­to­ries to be more dy­namic

Pri­vate Sec­tor be­ing given full play in achiev­ing self-re­liance in de­fence pro­duc­tion


De­fence Min­is­ter Nir­mala Sithara­man, has un­der­lined the need for re­vi­tal­is­ing de­fence PSUs and ord­nance fac­to­ries for meet­ing the am­mu­ni­tion needs of In­dia’s de­fence forces. “The man­age­ments of th­ese or­gan­i­sa­tions need to be ahead of the curve and show dy­namism,” as they pos­sess im­mense and valu­able as­sets that could of­fer man­u­fac­tur­ers huge pro­duc­tion op­por­tu­ni­ties, she said.

The De­fence Min­is­ter was ad­dress­ing Ammo In­dia 2018, the 1st In­ter­na­tional Con­fer­ence on Mil­i­tary Am­mu­ni­tion on the theme, Make in In­dia – Op­por­tu­ni­ties and Chal­lenges, or­gan­ised by FICCI and the Cen­tre fort Joint War­fare Stud­ies (CENJOWS) un­der the Min­istry of De­fence on March 12, 2018.

The govern­ment has opened up pri­vate in­vest­ment in de­fence pro­duc­tion, in­clud­ing lib­er­al­i­sa­tion of for­eign di­rect in­vest­ment. It has ini­ti­ated steps to de­velop two de­fence in­dus­trial pro­duc­tion cor­ri­dors in the coun­try and also pro­poses to bring out an in­dus­tryfriendly De­fence Pro­duc­tion Policy 2018 to pro­mote do­mes­tic pro­duc­tion by pub­lic sec­tor, the pri­vate sec­tor and MSMEs.

The De­fence Min­is­ter said that the govern­ment ex­pects whole­hearted par­tic­i­pa­tion of In­dian in­dus­try and for­eign OEMs to lever­age the indige­nous ca­pa­bil­ity and op­por­tu­ni­ties for self-re­liance in de­fence pro­duc­tion. She said that De­fence Min­istry was en­cour­aged by the quan­tum of out­sourced com­po­nent in de­fence man­u­fac­tur­ing which had risen to 29 per cent in fis­cal 2016-17. This, she said, dis­played that Tier-I In­dian com­pa­nies were up to their task and also serve as an as­sur­ance to SMEs that their prod­ucts would be sourced by big com­pa­nies.

The Min­is­ter said that it was in this con­text that the an­nounce­ment was made in the 2018-19 Bud­get that two de­fence in­dus­trial pro­duc­tion cor­ri­dors would be es­tab­lished. The one be­tween Chen­nai and Bengaluru via a stretch of ord­nance fac­to­ries was com­ing up well and it was en­cour­ag­ing that SMEs had started to bring in start-ups to pro­duce for the armed forces. Co­or­di­na­tion be­tween the DIPP and the Home Min­istry was be­ing ac­tively pur­sued and this should give com­fort to OEMs that dif­fer­ent arms of the govern­ment were en­gaged in a well-oiled ef­fort. The govern­ment was also ac­tively work­ing on the sec­ond cor­ri­dor be­tween Ali­garh-AgraJhansi-Chitrakoot-Kanpur-Luc­know, she said.

She also said that un­der the ‘Make II’ ini­tia­tive, pro­ce­dure had been sim­pli­fied and once a pro­to­type was de­vel­oped and tried out, man­u­fac­tur­ers should not worry about or­ders as th­ese would be forth­com­ing. The De­fence Min­is­ter also re­leased a FICCI-CENJOWS knowl­edge paper on ‘Am­mu­ni­tion Man­u­fac­tur­ing in In­dia: Road to Self-re­liance’.

Lt Gen­eral, Giri Raj Singh, SM, Di­rec­tor Gen­eral Ord­nance Ser­vices, In­dian Army, in his ad­dress, pointed out that un­der one of the largest pro­cure­ment ini­tia­tives in arms and am­mu­ni­tion launched by the De­fence Min­istry, RFPs for eight projects were re­leased for pro­cure­ment of medium and large cal­i­bre am­mu­ni­tion for the In­dus­try pri­vate sec­tor. Th­ese projects en­tail an ex­pen­di­ture of ` 70,000 crore in 10 years. The fi­nal cor­ri­gen­dum, in­cor­po­rat­ing the amend­ments, to the RFPs would be out in the next one month. He said that the vi­sion was com­plete self-re­liance in ar­ma­ment man­u­fac­tur­ing and the govern­ment’s ‘Make in In­dia’ pro­gramme has paved the way for mak­ing the vi­sion a re­al­ity.

Rashesh Shah, Pres­i­dent, FICCI, called for fast-track­ing the clear­ances of li­cences for pro­duc­tion by the pri­vate in­dus­try, eas­ing of re­stric­tions on the num­ber of contracts a com­pany could bid for and re­duc­tion in the re­quire­ment of high earnest money for pro­cure­ment or­ders. He also un­der­lined the need for cre­at­ing a level-play­ing field for all play­ers to speed up indige­nous de­fence man­u­fac­tur­ing.

Lt Gen­eral Vinod Bha­tia PVSM, AVSM, SM (Retd), Di­rec­tor, CENJOWS, in his con­clud­ing re­marks at the in­au­gu­ral ses­sion said that Ammo In­dia pro­vided a com­mon plat­form to in­dus­try play­ers to share their con­cerns on na­tional se­cu­rity to fa­cil­i­tate the prepa­ra­tion and pre­sen­ta­tion of a prag­matic roadmap for de­fence pro­duc­tion to the govern­ment.

Se­cre­tray Gen­eral, FICCI, Dr San­jaya Baru as­sured the De­fence Min­is­ter that FICCI is ready to ex­tend all sup­port to the govern­ment in the or­gan­i­sa­tion of the up­com­ing De­f­expo.

FICCI-CENJOWS Knowl­edge Paper

The FICCI-CENJOWS knowl­edge paper makes sev­eral rec­om­men­da­tions to the Min­istry of De­fence and pri­vate in­dus­try to at­tain the ob­jec­tive of self-re­liance. Th­ese in­clude:

Re­duce pro­cure­ment lead times: Mul­ti­ple RFIs and RFPs have been is­sued in the past with no re­sult in the arms and am­mu­ni­tion cat­e­gory.

RFP must out­line com­plete roadmap: It would not suf­fice to sim­ply is­sue RFPs ex­clu­sive to pri­vate in­dus­try. Com­plete roadmap for an am­mu­ni­tion RFP should be out­lined, one with hand-hold­ing and guid­ance to the pri­vate in­dus­try from the Govern­ment of In­dia, (in­clud­ing agen­cies like the DGQA, the end user and DRDO).

Long-term covenant: This should be part of any pro­posal for am­mu­ni­tion man­u­fac­tur­ing, once you place an or­der on a com­pany then for next 10 years they would be the source for that prod­uct (in or­der to get ROI on in­fras­truc­ture in­vest­ment).

In­dus­trial li­cens­ing process should be stream­lined: DIPP has an on­line process now but MHA (which is­sues li­cence for small arms and am­mu­ni­tion) is an off­line process; Doc­u­ments re­quired need to be clearly stated, since the doc­u­ments stated on the site and forms do not seem to suf­fice.

Es­tab­lish an Om­buds­man for In­dus­trial Li­cence: Reg­u­lar feed­back mech­a­nism and in­ti­ma­tion to the in­dus­try on de­tails lack­ing in their ap­pli­ca­tion and well as sta­tus.

The paper notes that lack of de­sign and R&D within the pri­vate sec­tor, still leaves us depen­dent on for­eign OEMs for trans­fer of tech­nol­ogy. Notwith­stand­ing the fact that this sec­tor was not open to the pri­vate in­dus­try, there needs to be more than just in­tent from the com­pa­nies to fruc­tify arms and am­mu­ni­tion man­u­fac­tur­ing and ad­dress the needs of the Armed Forces.

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