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February 15, 2013

70 per cent of defence machinery imported while Indian defence companies find government a hindrance

When drones, or unmanned aerial vehicles, of the US Army fly over enemy territory, they use a technology developed by a little-known Bangalore company to send back crystal clear images to their command centre. This technology is used by armed forces around the world, except in India — the home of its developer ArvindLakshmikumar, who founded Tonbo Imaging four years ago.


Tonbo developed this technology for Europe's biggest defence company which, in turn, sold it to various armed forces. Lakshmikumar, 36, had been keen to sell such innovations to the Indian armed forces, but gave up after he realised the futility of trying to convince the authorities here that his products were among the best in the world.

He shifted his headquarters to Singapore, as he felt that he could crack the global market for his technologies better from the Southeast Asian city state. Lakshmikumar's ordeal is just another example of the difficulties and frustrations that small Indian aerospace and defence companies have to go through, facing a hostile bureaucratic set up on the one side and a colonial mindset on the other.

"There is a serious colonial hangup for foreign products," says Lakshmikumar. "For an Indian bidder they have millions of questions." The milieu is skewed so against the local players that while an Indian bidder is asked to pay a security deposit, a foreign bidder is not.

"The system is structured in such a way that even if we need a pin, we prefer to import it rather than make it ourselves," says Smita Purushottam of the New Delhi-based think tank Institute of Defence Studies & Analyses.

India imports more than 70 per cent of its weapons and technology for its defence needs, making it a sitting duck for security threats during wars. In contrast, even Pakistan has a more proactive policy that encourages domestic manufacturers. China is in a different league altogether. The mindset of those in power is also hurting the economy. India will spend $100-150 billion (about Rs 5.4-8.1 lakh crore) on defence modernisation programmes by 2022, according to consulting firm Frost & Sullivan. It will also become the fourth biggest defence spender in the world by 2020, behind the US, China and Russia, according to IHS, a US-based information and analytics provider.
"The best of our minds are utilised by other countries for their progress," says A Sivathanu Pillai, a scientist and CEO of BrahMos Aerospace, the maker of BrahMos missile. "Put them on the same level field, and they will compete." The government said its intention was to promote local companies when it unveiled its offset policy in 2005-2006, requiring foreign firms winning defence contracts to ensure that at least 30 per cent of the contracted value is invested in India. But most of it is still on paper.

The EconomicTimes

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