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Private Investment in Missile technology

9/8/2017 129 Science Affairs | Defence | View Recent Current Affairs

  • India’s first private sector missile sub-systems manufacturing facility, a joint venture between Kalyani Group and Israel’s Rafael Advanced Defence Systems Ltd., was recently inaugurated near Hyderabad.
  • Formed in line with the ‘Make in India’ initiative of the Centre and the policy to encourage private sector participation in defence production, the 51:49 joint venture will develop a wide range of advanced capabilities.

Analysis:

  • Before the liberalisation in 2001, the history of Indian defence industry was characterised by what can be called State-led industrialisation.
  • State intervention, though, succeeded only in creating a vast defence industrial base consisting of 39 Ordnance Factories, eight Defence Public Sector Units (DPSUs) and 50 Research and Development laboratories, but failed to achieve the desired objective of ‘self-sufficiency’ in defence production.
  • The failure of State-led industries to meet the country’s military needs stemmed from the State monopolising military production and preventing the private sector from playing a meaningful role in defence production.
  • India is the world’s largest importer of defence equipment and spends around $24 billion a year, this means import substitution and indigenization. There is need to change and only private manufacturing is the easiest way out.
  • But Private companies are also facing some hurdles while dealing with defence production. Requirements of the armed forces are not made known to the private sector sufficiently in advance, with the result that it does not get adequate time, either to scout for foreign tie-ups or to establish the necessary facilities. The time given for the submission of technical and commercial proposals is grossly inadequate for a new entrant in the field.
  • Due to the very nature of its usage, defence equipment has to meet highly exacting standards. There can be no failure in the face of the enemy. Regrettably, many Indian vendors have not fully grasped the import of this requirement and find the quality control regime to be extremely irksome.
  • DRDO and Defence PSUs need to be made efficient and answerable and in the long term privatised.
  • India has to find more funds for R&D. Till we get our technological prowess, there is a need to take steps to leap frog by collaboration with industry partners from within and outside the country.
  • In addition to the economic benefits, increased jobs, improved capability and the development of critical technology, indigenisation would ensure India has ready access to the best available defence equipment.
  • Since the launch of the ambitious ‘Make in India’ initiative, 46 licences have been issued in the defence sector to produce items including light armoured vehicles, artillery weapon systems, UAVs and underwater systems. Private players have also been given industrial licences to produce electronic warfare systems, air defence weapons, and armoured panels for helicopters among other items. The immediate aim is to attract global companies to undertake the manufacture of their products in India. India will need about 200,000 skilled people in the defence and aerospace industry in 10 years.
  • India needs to allocate at least 2.5% of GDP; up from current 1.67% for at least next ten years to bridge the gap. India wants to reduce defence imports by at least 20%-25% through domestic production. Indian industry is good at small component manufacture, electronics, software, heavy engineering, sheet metal work, high quality milling and these needs to be harnessed.
     

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