JVs in defence sector, need of the hour

Last few weeks have witnessed significant developments in the field of Indian defence manufacturing. The Indian Navy’s first indigenously built floating dock was launched at Larsen & Toubro (L&T) shipyard in Kattupalli. The Tata Advanced Systems Ltd and the US plane-maker Lockheed Martin Corp signed an agreement at the Paris Air Show to produce F-16 fighter jets in India. Reliance Defence entered into a strategic partnership with Serbia’s Yugoimport for ammunition manufacturing in India and joined hands with France’s Thales to set up a joint venture that will develop Indian capabilities in radars and high-tech airborne electronics.
These are welcome baby steps towards translating the Modi government’s Make in India policy on the ground. Opening up the state-run defence sector to private players and foreign firms was overdue. That the army has rejected an indigenously-built assault after field tests for the second successive year shows that the country’s public sector defence industry is unable to meet its requirements.

In the past, India has been making up for this failure at home with imports from abroad. The Modi government has put defence at the core of its domestic manufacturing programme. It has set up an ambitious target of securing about 70% of India’s military needs from domestic sources by 2020 by opening up the largely state-run sector to private players and foreign firms. Unfortunately, the operationalisation of this plan has been delayed due to the absence of a full-time defence minister and the decision on strategic partnership in indigenous defence production could be taken only last month. The contracts inked this month are just small steps. We have miles to go before we can develop indigenous capability through technology transfers and joint production projects with international partners.

A major imperative for the plan to succeed is to build up a defence industrial ecosystem that not only meets military requirements but also generate exports, create jobs and spur innovation. Our armed forces are still heavily dependent on imports and indigenous defence production is dominated by the public sector. The private firms that are coming up are still struggling to find their feet. Foreign industry giants are not eager to transfer their technology. Mandarins in the defence ministry remain tilted in favour of public sector defence industry. They are unable to evolve a workable system for engaging with private players as prime contractors. It is too early to say if the government’s efforts to meet 70% of our military requirements through indigenous production will bring better results. Much depends on how its “strategic partnership” model, released late this May, plays out on the ground.

 deccanherald