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Wednesday 11 December 2019
Economy Make-in-India in defence equipment manufacturing a flop?

Make-in-India in defence equipment manufacturing a flop?

None of the six major defence projects under Prime Minister Narendra Modi's flagship Make-in-India initiative launched in 2014 has taken off

None of the major Make-in-India projects in the defence sector, ranging from new-generation stealth submarines, mines and light utility helicopters to infantry vehicles, transport aircraft and fighter jets, have actually succeeded in the past six years. These long-overdue projects, worth more than Rs 3.5 lakh crore, are either stuck or still in separate stages of production.

The relatively new Make-in-India project to build approximately 7,50,000 Kalashnikov AK-203 Assault Rifles in a joint venture with Russia at the Korva Ordnance Factory in Uttar Pradesh may, in fact, kick in first.

In October 2017, it was found that six mega Make-in-India projects were encountering bureaucratic hurdles, long-winded processes, commercial and technical wrangling, coupled with expected political pressure and lack of follow-through, as reported then by The Times of India.

Two years later, the story is more or less the same for seven major projects. Since 2017, India has cancelled the fifth-generation large fighter aircraft project with Russia in favour of the indigenous Advanced Medium Combat Aircraft (AMCA) project.

The Ministry of Defence says that a number of measures have been taken to promote indigenous defence production, including amendments to the Defence Procurement Process (DPP) and FDI policy, simplification of ‘Make in India’ procedures and guidelines, notifications for “strategic partnership (SP)” model and the decision to establish two defence industrial corridors in Tamil Nadu and Uttar Pradesh.

“There is a big push to boost indigenous defence production, but it will take time to fructify on the ground. Some projects are about to close.” a senior official said, adding that the contract for the AK-203 rifle should be launched early next year after some delay following the establishment of a joint venture with Russia.

“Similarly, it took a long time for the Tata-Airbus project to conclude price negotiations to build 56 C-295 aircraft as it was a single-vendor position but the matter would now go to the Cabinet Committee on Security for approval” she added.

1. Light Utility Helicopters (IAF & Army): As many as 200 Kamov-226T helicopters were supposed to be made under Make-in-India at a cost of over Rs 8,000 crore to replace obsolete Cheetah/Chetak fleets. The agreement for the same was signed with Russia in December 2015. A joint venture was formed but there is no final contract. This project is stuck in the technical evaluation stage. 2. Naval Utility Helicopters: 111 armed, twin-engine helicopters for Rs 21,273 crore were to replace single-engine Chetaks. The Defence Acquisitions Council approved this first strategic partnership (SP) project in August 2018. Four Indian and three foreign firms shortlisted but HAL wanted a share of the pie. An RFP (request for proposal) will be floated next year. It will take at least three years for the contract to be in place. 3. Diesel-Electric Submarines: 6 stealth diesel-electric submarines costing over Rs 50,000 crore under Project-75 (India) got the ‘acceptance of necessity (AoN)’ in November 2007. An Expression of Interest was issued to Indian shipyards and foreign manufacturers. The selection of Indian shipyard-foreign firm duo will take at least four more years. Another seven or eight years will be gone before the first submarine rolls out.
4. Future Infantry Combat Vehicles2,314 in number, for Rs 60,000 crore were to replace the ageing BMP-2 fleet. The project got the AoN in October 2009, but it was stuck as the ministry moved it from ‘Make I’ to ‘Make-II’ category. The companies concerned are embroiled in a dispute over the contract. 5. Mine Counter-Measure Vessels, 12 in number, to detect and destroy enemy mines were to be made for Rs 32,000 crore. The Navy has been looking for these MCMVs since July 2005. The proposed project to be handled jointly by the Goa Shipyard and Kangnam Shipyard (of South Korea) was scrapped in January 2018. A fresh RFP is likely in early 2020. 6. Fighter Jets, 114 in number, for Rs 1.4 lakh crore were requisitioned through a tender issued in April 2018. After Rs 59,000 crore deal for 36 Rafale jets were signed with the French government in September 2016, replacing the defunct deal for 126-jet medium multi-role combat aircraft (MMRCA) project, the AoN is likely in April-May 2020. RFP will then be issued to seven foreign contenders. It will take at least for years before the contract is in place.
7. Medium Transport aircraft: 56 twin-turboprop were to replace the IAF’s old Avro aircraft fleet for Rs 11,929 crore. The IAF sought the aircraft first in June 2011. RFP was issued to eight big aviation manufacturers in May 2013. The ministry cleared the Tata-Airbus project for C-295 aircraft in May 2015. The protracted commercial negotiations are now over. The case will now go to the CCS for final clearance.

 

If India must overcome the embarrassment of a strategically weak position being the world’s largest arms importer, this bureaucratic approach must end. The SP policy to increase the role of Indian companies in the production of new generation weapon systems in association with global armament majors has, in fact, only delayed projects further.

For example, the armed forces have been seeking new light utility helicopters for 15 years to replace their obsolete single-engine Cheetah and Chetak fleet, which suffer from high accident rates and serviceability problems. Under the Make-in-India SP policy, the Navy will have its first project for 111 armed, twin-engine utility choppers costing more than Rs 21,000 crore. But only four Indian firms Tata, Adani, Mahindra Defence and Bharat Forge and three foreign manufacturers (Airbus, Kamov and Lockheed Martin-Sikorsky) were recently shortlisted, while defence PSU Hindustan Aeronautics is complaining that it has not been considered for the helicopter project.

Similarly, the Navy’s demand for six new stealth diesel-electric submarines, first approved in November 2007 at a cost of more than Rs 50,000 crore, is not close to being finalised under the SP model.

Sample another Make-in-India project. India and Russia in December 2015 included an intergovernmental agreement to build 200 Kamov-228T light-useful helicopters worth more than $ 1 billion. However, it is stuck in the technical evaluation phase on the “low level of indigenisation” offered by Russia.

This much-delayed project is considered significant for twin-engine light utility helicopters as India’s attempt to procure 197 such helicopters from abroad thrice in the last decade has ended due to allegations of corruption and technical deviations.

Based on a Times of India report

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