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Def Expo Brief: Defence Production inFocus
The 6th international Exhibition onLand and Naval Defence systems (Def Expo 2010) which concluded has been atremendous success as per the Ministry of Defence. Over 1,26,000 visitorsincluding 85,000 business visitors came to the exhibition. The four-day eventwas the largest ever Defence Exposition in Asia andshowcased India’semergence as an attractive destination for investment in the Defence Sector andprovided a platform for alliances and joint ventures in Defence industry. Over650 companies from about 35 countries displayed weapon systems for Army andNavy. Major participants were from USA,UK, Russia,Austria, CzechRepublic, Finland,France, Greece,Hungary, Israel,Korea, Netherlands,Norway, NewZealand, Poland,Singapore, Spain,Sweden, Switzerland,Taiwan, Ukraine,Germany, Belgium,Bulgaria, Canada,Israel, Italy,Malaysia and SouthAfrica.
India’spush for indigenization was the main focus of the Defexpo 2010. The Minister ofDefence Mr A K Antony inaugurating the Def Expo highlighted the same thus, “Wehave made Defence Procurement Procedures transparent and to speed up theDefence acquisition process... We will soon publish the ‘Technology Perspectiveand Capability Roadmap’, covering a period of 15 years, to share the futureneeds of our Armed Forces”, Shri Antony said. Some of the proposals which wouldprovide a push to this process are said to include the new category of Buy andMake Indian, introduced in the Defence Procurement Procedure (DPP) – 2009 whichwill facilitate Transfer of Technology. The Request for Information (RFI) hasbeen made mandatory for all acquisition cases
MrAntony acknowledged that technology remains one of the challenges thus, “Thebiggest challenge facing the world today is the security threats arising out ofrapidly advancing technology. This hasadded a new dimension to the overall security environment”.
The offsets are another route forentry into the Indian defence industry. As on date, 10 offset contracts havebeen signed worth Rs. 8200 crores wherein 31 private Indian firms have beenbenefited apart from the OFB/DPSUs. There are 41 offset contact worth more thanRs. 49000 crores in the pipeline at various stages of negotiations which aregoing to materialise in the next couple of years. This will provide furtherimpetus to the Indian industry. I would like to mention here that Government ofIndia is committed and alive to aspirations of private industry and theirproblems and you will be glad to know that more than Rs. 4200 crores ofcontracts out of total offset contracts of worth Rs. 8200 crores signed so farhave gone to private Defence Industry.
For land forces Arjun and T-90 tankshave been inducted into the service and production within the country asalready commenced. The up gradation or older version tanks (T-72) is alreadyunderway with the collaboration of Private Industry. ALH (Dhruv) has beenintroduced in service with latest weapon mounted platform. Similarlyprocurement of Cheetal helicopters is already underway. Replacement of L-70guns and ZU 23 guns by new generation Air Defence weapon systems and inductionof AKASH Missile Systems has commenced. The upgradation of Base workshops andthe CODs is progressing at good pace.
There are number of high techsystems which the Indian Land Forces require to fight the future battles. Thereis a requirement to upgrade the Infantry soldiers into systems i.e. F-INSAS(Future Infantry Soldiers as system) which will include latest Assaults rifles,Head up display helmets, bullet proof jackets, Boot Anti Mine etc for which theprocurement process has already commenced. In the field of Artillery the futurecalibres of gun will be 155 mm / 52” calibre. The plans are already underway toprocure the Towed Ultra Light Howitzer Self Propelled Track & Wheeled andMounted Gun System. The Rocket System SMERCH and PINAKA have already beenintroduced into the service.
DefenceMinisters from UK,Bulgaria, Hungary,Nigeria, Turkey,Uganda, Senegaland Surinamealong with Official delegations from 41 countries participated in theexhibition. Naval Chiefs from Kazakhstan,Mozambique, Brunei,Qatar and Senegaland Army Chief from Mongoliaalso attended the exhibition. About 25 new products were launched by Indian andForeign companies during the exhibition and more than 550 business to businessmeetings were also held. Various business bodies such as FICCI, CII, ASSOCHAMand PHD Chamber of Commerce organized thought provoking seminars during theshow.
In a media interaction, Defenceminister A.K. Antony said the finance ministry had rejected an Indian Air Forceproposal to buy mid-air refuellers, Airbus 330 MRTT refueller over the Ilyushin78 and had proposed buying six of the aircraft. “All purchase proposals go tothe finance ministry, and the finance minister is also a member of the cabinetcommittee on security (CCS),” he said. “Unless the finance ministry supports aproposal (for a defence acquisition), the CCS cannot take it up. In that (themid-air refueller) case, the finance ministry categorically told us that theywill not support the proposal in the CCS”.
The exceptional interestby government and defence companies from across the globe in the Indianmilitary industrial complex has been encouraging. Conventional wisdom says thatmost of the companies are making a beeline to New Delhi to partake in thebillion dollar off takes from acquisitions by the Indian armed forces from themost talked about 126 fighter MMRCA to assault rifles for the Special Forcesand even flak jackets for the para military. However the really smart companiesshould be looking at Indiaas a long term opportunity for establishing a global defence exports hub.
Given the size and shape of our defenceindustry today with a mere 30 percent indigenization this premise may appearquite fallacious. However a brief look at the potential will denote that giventhe right policies, synergy in various arms of the government, industry bodiesand public and private sector enterprises who have ventured in the defencesector this would be achievable possibly in a decade and a half or so. Somemeasures that may contribute to this paradigm are right policies providingincentives to both domestic and foreign players, smooth backward and forwardintegration between the armed forces and defence exports to create volumeswhich in turn will drive economies of scales and finally coordinating andfacilitating mechanisms.
MARCH 2010
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