The Case for Indian Industry

There is a campaign to prove that Indian Industry cannot deliver and only foreign OEMs can.

There are only two growth areas for defence expenditure in the world – America and India/China. Of these, the Chinese market is closed because of the arms embargo. The Indian market is the only bailout for OEMs. A Jane’s study came to similar conclusions.

How will OEMs ensure that they get a share of the Indian pie – the bigger the better? They can only get it if the abilities of Indian Industry are run down.

They don’t need to get their hands dirty for this. So many Indians are ready to oblige!  67 years after Independence and we can’t get over our you know what.

Also, OEMs don’t fear PSUs, which have acted as pliable conduits for imports, giving away market access for free. Honourable exceptions are PSUs in the Naval sector, BHEL and HAL under Dr. R.K. Tyagi’s leadership. They fear the Indian private sector.

Foreign companies quickly recovered from the shock administered by the adoption of the Preferential Market Access Policy (PMA), which could have helped Indian industry gain just a little domestic market share in their own country in telecom and electronics, forcing backtracking on the PMA.

Now something even more nefarious is going on. Indians are trying to frame the conditions for the bids in such a way that all Indian companies will be eliminated from even bidding. A member of Indian Industry has cried out – how can this happen in our own country?

People, you need to ask the same.

At a think tank meeting, two leading experts actually reportedly concluded that India does not need a defence industrial base!

Every statement made by these manufacturers should be read in this light. Myths being promulgated against Indian industry need to be decisively refuted as they are deeply ingrained in the minds of officials and are reflected in their statements and actions. This is doing incalculable harm to India’s desire to create a high-tech, indigenous defence production base. The eco-system that this will spawn will provide high grade, quality employment to millions of young Indians, who today are wasting their graduate degrees in pitiful employment avenues.

Myths of Sisyphus being spread in the market about Indian Industry:

  • Myth 1: Indian industry does not have the capability to undertake hi-tech manufacturing.
  • Myth 2: India’s Offsets policy is very strict – 30% direct Offsets is wayyyy….too much.
  • Myth 3: Indian Industry lacks the sponge factor-i.e.- it does not have the capacity to absorb Offsets.
  • Myth 4: Higher the percentage of FDI, greater the technology transfer! (Jeez, they don’t know the basics, do they now?)
  • Myth 5: Multipliers and Indirect Offsets in other sectors must be given.

Let us examine these “Myths of Sisyphus”, which have held back Indian Industry, one by One:

Myth 1

  • Indian industry does not have the capability to undertake hi-tech manufacturing!

Fact: India has very strong industrial capacities, and its private and public sector wields great financial power and capabilities. Many Indian firms have won high-tech project contracts abroad and have been praised for their quality, cost effectiveness and on-time performance.

In the nuclear sector, self-reliance was promoted from Day 1. Emphasis was on indigenous design and in-house technology. Public-Private Partnerships were encouraged, with BHEL and L & T allotted core tasks on an equal playing turf. The reactors and core nuclear know-how were under DAE but equipment and systems were built by Indian Industry.  After the 1998 tests, India faced unprecedented sanctions. And yet Indian companies delivered the highest level of complex and high-tech systems. The Arihant Submarine Program, launched in 1997, under the peak of the sanctions regime, was successfully delivered under a PPP (Public-Private Partnership) model.

Samyukta Electronic Warfare (EW) System for the Army – was another successful example of a completely indigenously developed system under the PPP model. Dr. Abdul Kalam was the driving force behind putting this technology into Indian hands. He publicly acknowledged Tata’s and CMC’s contribution – which met the challenge of developing real-time command and control software, not for profit.

In the Aerospace industry, many capabilities were built by Indian Industry. User, R & D and Industry moved in unison, thus achieving national capability. Most importantly, faith was kept. ISRO asked L & T to continue making some important components (motor casings) even where there was no demand because it didn’t want India to lose the technology. And sourcing was restricted to Indian players, not to external sources.

Ashok Parathasarthy details in his excellent book “Technology at the Core” numerous example as how the old Indian State supported high-tech Indian companies and helped them win market share.

We succeeded because we believed in ourselves, we believed in our Industry and most of all we even believed in our Private Industry.

This can be replicated in defence.

But what has happened since?

  • Complete change!
  • I love you OEMs policy has been adopted
  • The exclusion of Indian Industry from domestic contracts is a recent phenomenon.
  • In the name of ‘Security’ the Indian private sector is being denied participation in the same Electronic Warfare programmes which it created in the first place.  L&T which gave the hull for Arihant is denied the same for a conventional Submarine.
  • An order from Indian Industry cannot be processed under the current acquisition system. Indian Industry cannot even get an RFP.
  • How is giving orders to foreign industry compatible with National Security while Indian Industry is denied the opportunity to contribute on the same security grounds?
  • As a result India has become an Import-Oriented Economy which favours only foreign imports!  This has benefited foreign companies, deprived India of the multiplier effects of domestic production, opened up the country to an endless outflow of foreign exchange and undermined its capacity for strategic autonomy.
  • Myth 2: Offsets policy of India is very strict – 30% direct Offsets is too much.

Fact: Most countries have 100% Offsets. But India, 10th industrial power in the world, is considered incapable of absorbing offsets and is extremely apologetic even over seeking 30%.

Indicative list of countries with 100% Offsets: Argentina, Austria, Brazil, Bulgaria, Canada, Chile, Colombia, Croatia, Denmark, Estonia, Greece, Italy, Malaysia, Netherlands, Norway, Peru, Portugal, Slovenia, Switzerland,

  • Myth 3: Indian Industry does not have the capacity to absorb offsets.

Fact: Offsets are the key to achieving technological independence and relocating manufacturing activities to developing countries and every country studied is successfully operating Offsets, not FDI, to kickstart indigneous defence production sectors. The US$100 billion Indian defence market should yield US$ 30 billion at least in Offsets under India’s current lax Offset policy over a period of 10-15 years. It is laughable to suggest that Indian industry cannot absorb a paltry US$ 2-3 bn a year.

A medium-sized Indian company achieved turnover of $107 million in 2002 and $1200 million in 2011 in high-tech manufacturing. Exports stood at $25 million in 2002, but reached $800 million in 2011 (70% of production)! This is just one relatively small medium sized Indian company. Why do we talk in such awe of absorbing only $10 bn in 10 years?

A valid question is why is Indian industry never consulted on Offsets, while only baboos, foreign advisors or those in their pay, and armchair experts decide on policy? India has been apologetic over 30 % offsets instead of seeking 100% as other countries do. An EU code of conduct on defence offsets signed by all the EU nations except Romania and Denmark states that its primary purpose is to promote the “European Defence Technological and Industrial Base”. It pleads humbly with member countries to exercise self-restraint and limit the offsets quantity to 100% of the contract value! It includes Multipliers, TOT etc. And we are apologetic on 30% as a nation. Kaan pakro!

  • Myth 4: FDI is the only route for India to get technology.

Fact:

  1. Access to technology is not an issue at all. Today some of India’s companies are the largest manufacturing employers in advanced countries and have access to all kinds of high technologies. The main issue is that control should not be ceded.  Today, we have several tie-ups in which because the Indian firm has control – the global partner has agreed to transfer every aspect of knowhow and know why.
  2. Experience shows that when market access has been routed through indigenous firms – global partners have agreed to transfer every aspect of knowhow.In the 1990s when we had C-DOT, India got much better prices on exchanges than did China. Without CDOT we would have been ripped off. A lot of companies came in for manufacturing partnerships in India, but they all moved out since we have not encouraged or leveraged the market to create a telecom manufacturing sector or a single Huawei.The minute market access is denied, the foreigners’ behaviour changes completely. Till the offset dilution on Lockheed Martin was approved, the foreign party was going through the Indian partners for ToT and creation of capabilities.
  3. ToT does not flow from FDI necessarily.  For example, the GE centre in India has 100% FDI, but they cannot part with even one drawing to any Indian party without seeking US permission.  India has 100s of R & D centres of MNCs but none of them share technology with Indian firms or Indians. China realised this years ago and that is why they started to focus on Indigenous Innovation. 
  4. No country allows high FDI in defence. The most restricted place for defence manufacturing is the US, yet they want 100% in India!
  5. Indian Defence Industry has proved its ability to deliver state-of-the-art technology against the odds of global sanctions when allowed to (above).
  6. If FDI is considered necessary, for local manufacturing of state of the art weapons, we must have control by Indian companies, strong local sourcing, skill development and employment obligations.
  • Myth 5: Multipliers and Indirect Offsets in other sectors must be given.

Fact: Since we have advocated 100% Offsets, we are in favour of applying Offsets in areas related to Defence Production. However, there is huge potential for more scams through these provisions. Only if India puts in place robust and credible monitoring mechanisms can these be agreed to, as other countries have benefited from indirect offsets. Till then, these can be kept in abeyance.

To India

India has come a long way since 1991. Indian Industry is seeking global leadership and has the capability to deliver. It just has to be given a chance.  It has performed well whenever it has had a level-playing field.

What it can’t do is provide post-retirement scholarships and sinecures remunerated in US dollars on the Boards of MNCs to every selfish little soul who puts his interest above that of the country. All such appointments should be examined for conflict of interest regarding decisions taken and articles written against Indian Industry.

If Indian Industry can produce world class products in some sectors, why not in defence?

Indian Industry has to engage with the political class and the bureaucracy. Foreign officials got high level access whereas senior Indian Industrialists in the manufacturing sector were unable to secure meetings with decision makers. The classified LTIPP was known to foreign vendors but not to Indian industry.

The leadership has to promote Indian industry. The heads of government of 4 countries visited India to lobby for the MMRCA. India has to get into a pro Indian industry mode and promote the expansion, indeed the explosion of domestic capabilities. Every country id pursuing a defence industrialisation strategy to promote employment and national welfare. We can too!

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US report on the Impact of Defence Offsets on Its Defence Industrial Base

The  16th  Annual  Report  to  Congress  on  the  Impact  of  Offsets  in  Defence  Trade  has  the  following  to  say:

  1. Between  1993-2010,  US  firms  agreed  to  $78.08  billion  worth  of  Offsets  out  of  defence  exports  worth  $111.59  billion,  or  nearly  70%.    Technology  transfer  was  among  the  top  3  offset  categories.

NEGATIVES  FOR  US:

  1. The  report  however  warned  that  Offsets  would  “limit  future  business  opportunities  for  U.S.  subcontractors  and  suppliers,  with  negative  consequences  for  the  domestic  industrial  base.  Other  kinds  of  offsets,  such  as  technology  transfers,  may  increase  research  and  development  spending  and  capital  investment  in  foreign  countries  for  defence  or  non-defence  industries,  thereby  helping  to  create  or  enhance  current  and  future  competitors  to  U.S.  industry….”

Which  is  exactly  the  point  of  Offsets,  that  they  should  help  in  boosting  the  defence  industrial  base  and  wean  developing  countries  off  the  need  to  keep  importing  in  perpetuity.

POSITIVES  FOR  US:

  1. However  the  report  also  notes  –  ‘anecdotal  information  obtained  from  industry  suggests  that  “cutting  edge”  or  nascent  technologies  under  development  in  the  United  States  are  less  likely  to  be  transferred  to  foreign  companies  in  fulfillment  of  offset  obligations  than  are  mature  technologies’.   
  2. Also,  Offsets  involving  technology  transfers  were  only  $985.0  million,  equivalent  to  only  0.24%  of  total  US  R&D  spend.
  3. The  report  further  notes  “Despite  the  capabilities  that  may  accrue  to  foreign  firms  resulting  from  offset  agreements  signed  with  U.S.  industry,  purchases  from  foreign  firms  do  not  represent  a  significant  share  of  DOD’s  total  purchases.    Purchases  of  defence  manufactures  from  US  sources  by  DOD  totaled  $102.46  billion  out  of  total  purchases  of  $106.80  billion  in  2010,  with  purchases  from  foreign  entities  only  $4.34  billion,  or  4%  of  the  total.   
  4. Moreover,  the  US  recorded  ‘an  overall  net  gain  …  a  positive  $7.2  billion  in  added  “input”  opportunities  for  the  U.S.  industrial  base,  and  a  net  gain  of  22,553  in  employment  opportunities  created  or  sustained  during  the  2009-2010  period’.   

POINTS  OF  INTEREST  FOR  POLICYMAKERS

  1. Interestingly,  one  discovered  that  the  analytical  report  is  written  in  pursuance  of  a  US  Defence  Production  Act,  whose  existence  one  was  unaware  of.    The  Defence  Production  Act  has  helped  the  US  develop  a  number  of  new  technologies  and  composite  materials  and  has  also  hand-held  startups  to  commercially  produce  technologies  they  could  not  have  done  on  their  own.   
  2. The  Defence  Production  Act  also  enjoins  on  the  government  to  very  closely  scrutinise  foreign  investment  proposals  in  the  United  States.    It  is  under  the  provisions  of  this  Act  that  some  Chinese  Investments  have  been  denied  in  the  US.
  3. The  point  is,  even  as  many  countries  have  benefited  from  leveraging  Defence  Offsets,  India  is  probably  not  among  them.  This  has  to  change.   
  4. The  above  also  imply  that  negotiating  defence  offsets  is  a  tough  business,  but  other  countries  have  succeeded  and  India  too  needs  to  stick  it  out.
  5. The  other  point  is,  the  US,  the  quintessential  free  marketer,  has  a  wide  variety  of  industrial  promotion  policies  to  help  maintain  its  technological  and  industrial  edge  and  fend  off  foreign  competition.  All  countries  follow  policies  that  are  conducive  to  promoting  their  own  domestic  industrial  base.    As  this  Livemint  article  (“An  economic  roadmap  for  India”points  out  -  it  is  not  healthy  that  India  has  failed  to  nurture  its  manufacturing  base:  “The  fact  that  India  has  moved  from  an  agricultural  economy  to  a  service-driven  economy  with  almost  no  growth  in  industry  is  not  a  virtue;  it  is  an  outcome  of  policies  that  have  hampered  manufacturing  and  mining.    With  production  costs  rising  in  China,  international  buyers  are  looking  for  alternative  sourcing  destinations  for  manufactured  products.  If  India,  with  its  large  labour  force,  is  to  seize  this  opportunity,  it  must  nurture  its  industrial  sector”.

Other  factoids  that  it  would  be  useful  for  our  policymakers  to  be  aware  of:

  1. “DOD  is  willing  to  use  reliable  foreign  suppliers  when  such  use  offers  comparative  advantages  in  performance,  cost,  schedule,  or  coalition  operations.    DOD  has  negotiated  bilateral  Reciprocal  Defence  Procurement  Memoranda  of  Understanding  (RDP  MOUs)  with  21  countries”  -  based  on  these  MOUs,  the  US  has  made  blanket  public  interest  exceptions  to  the  Buy  American  Act  for  20  of  these  countries,  as  a  result  of  which,  their  “products  are  evaluated  on  the  same  basis  as  domestic  products  in  competitive  DOD  procurements.”
  2. The  US  also  conducts  a  Dialogue  with  other  countries  on  Limiting  the  Adverse  Effects  of  Offsets  in  Defence  Procurement.  It  has  set  up  an  interagency  team  to  study  the  issue  and  report  to  Congress.  The  team  concluded  that  other  industrialized  nations  are  also  very  concerned  about  offsets  in  defence  procurement.
  3. The  European  Union  (EU)  Defence  Procurement  Directive  in  August  2011  was  a  very  significant  event  in  defence  offsets.    But  even  in  Europe  the  Code  states  that  offsets  will  not  exceed  the  value  of  the  procurement  contract  (100  percent  offset  limit).    
  4. 100%  is  way  above  the  highly  diluted  30%  offsets  provided  in  India,  and  even  this  we  have  been  unable  to  implement.

TIME  TO  LAUNCH  AND  IMPLEMENT  OFFSETS  IN  DEFENCE  PRODUCTION  AND  THE  AEROSPACE  INDUSTRY!

 

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CANADA FIRST!

SO PAPA DON’T PREACH

(On Defence Offsets)

We have the “once-in-a-century” opportunity to get it right when it comes to changing how we buy defence equipment.”  Honourable Diane Finley, PC, MP, Minister of Public Works and Government Services, Announcing the Defence Procurement Strategy,  Ottawa, Ontario, February 5, 2014

The High Tech Forum on Defence Innovation, which comprises experts in various fields related to enhancing indigenous high-tech capabilities, had concluded that Defence Offsets provide a huge opportunity to kick start India’s defence industrial base.

Successfully leveraging defence purchases to build indigenous capabilities is a worldwide trend. On the VISTAS-भारत Facebook page we had mentioned many countries implementing 100% Offsets – not just the 30% provided in our own laws.  Some countries even apply 400%!

So first of all, “Papa Dont Preach!” 30% is not too Onerous considering how many countries practice 100% and above. 100 percenters:

Argentina

Austria

Brazil

Bulgaria

Canada

Chile

Colombia

Croatia

Denmark

Estonia

Greece

Italy

Malaysia

Netherlands

Norway

Peru

Portugal

Slovenia

Switzerland

Canada is insisting on 100% REAL Offsets. Check out our earlier post on the subject – because of their “consistent” insistence, both Boeing and Dassault are either “promising offsets for Canadian industry worth 100 percent of the purchase contract value, or providing full transfer of aircraft technologies to the Canadian government, with no restrictions”.

Contrast this with the tough stance reportedly being taken with India on the MMRCA offset clause. India should straightaway jack up Defence Offsets to 100% at least and derive the maximum out of this once in a century opportunity. India is also right to insist that lifecycle costs and not just the initial purchase price, should be taken into account while calculating Offsets, as lifecycle costs can be extremely high. 

Now, Canada has just overhauled its defence procurement strategy to strengthen indigenous high-tech defence industry and take advantage of the fact that “Defence-related  industries  are  unique  in  that  governments  are  essentially  the  only  customers,  and  have  flexibility  under  international  trade  agreements  to  favour  domestic  suppliers.”

Since advanced nations are constantly brandishing the WTO against us – we must at least take advantage of the flexibilities provided for the defence sector. Wasn’t the WTO meant to facilitate our industrial development? But we had to withdraw the Preferential Market Access Policy for private sector procurements which would have benefited our manufacturing industry.

Thus, many countries have leveraged Offsets to become part of the sophisticated global high-tech aerospace supply chain. But at every turn we have failed to leverage our civil and military aircraft purchases and our considerable air travel market to build our own aerospace industry which can be part and parcel of an exciting high-tech global supply chain.

India also needs to develop the MRO market. A presentation by HAL is being posted which outlines the full potential of the market that can be exploited by Indian firms.

The next post will be on the subtle propaganda on the reputation and capabilities of Indian industry, and the myths being propagated in this regard. This helps only non-Indian firms. Since defence markets are under pressure worldwide, it is essential for OEMs to corner the growing Indian defence market and ensure Indian companies, which have won massive tenders abroad, are disregarded in their own country.

 SUMMARY OF DEVELOPMENTS IN CANADA

2008:  Canada  establishes  the  Canada  First  Defence  Strategy  (CFDS)  which  provides  stable  long-term  funding  and  a  roadmap  for  the  modernization  of  the  Canadian  Forces  over  a  20-year  period.

2013, February: Canada issues the excellent report “Canada First: Leveraging Defence Procurement Through Key Industrial Capabilitiesthe document starts with Canada First! This is what we have been advocating all along – INDIA FIRST! In Canada they call Offsets the Industrial and Regional Benefits (IRB) policy: the report mentions ‘A main source of revenue for Canadian industry relates  to  the  government’s  long-standing  Industrial  and  Regional  Benefits  (IRB)  policy  —  often  referred  to  generically  as  an  “offsets”  policy—  that  requires  winners  of  major  defence  contracts  to  spend  the  equivalent  of  the  dollar  value  of  contracts  (which  are  often  awarded  to  foreign  firms)  in  support  of  Canadian  industry’.

2014, February 05: Canada launches new Defence Procurement Strategy (DPS), with the following goals:

  • Companies bidding on defence and security contracts have to provide 100 percent Offsets. They are insisting Canada get full value for any procurement from Dassault and Boeing.
  • Deliver the right equipment to the Canadian military in a timely manner;
  • Leverage Canada’s purchases of defence equipment to create jobs and economic growth in Canada; and
  • Companies bidding on major defence and Coast Guard procurements have to prove that their bids support “Key Industrial Capabilities (KICs) and other productivity drivers, including industrial and technological high-value activities, for example, “technology transfer”.
  • “Implement an enhanced Export Strategy to support international sales opportunities and “participation in global value chains“” (Note: this is our key goal also).

This is our once in a century chance to get things right too. Let us fulfill India’s promise!

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Let’s get Serious! They say China Will…

This – “Why China will fight for a global climate deal next yearis good news for the Planet.  Time for everyone to realise together that we have only one planet! We see no sign of effective international action, so fusion technology, massive afforestation and use of green technologies will have to offset national emissions. Moreover, the transition to a high-tech growth model (below), which we in this Forum also envisage for India, will lead to a reduction in the more polluting industries:

China has started to establish innovation-based development. It is adjusting its economic structure, and no longer pursuing development at the cost of the environment. This new development path means that China has to lower its total energy consumption and change its energy framework to support further adjustments to its economic structure”

Extracts

“China’s leaders know that an effective treaty on climate change in 2015 is essential to the country’s development, says IPCC China expert Wang Chunfeng.

It isn’t hard to see that China’s motivation is genuine. First, China is suffering badly from the adverse effects of climate change. Over the last hundred years, the annual average rise in temperatures in China has been higher than the global average…Since the 1990s, China has suffered annual average economic losses of over 200 billion yuan (US$32 billion) as a direct result of extreme weather events, and an annual average death toll above 2,000. ..The latest reports from the Intergovernmental Panel on Climate Change (IPCC) predict that rising temperatures will grow more pronounced, adverse impacts will intensify and damage from extreme weather events in China will get even more serious.

Second, there is no contradiction between the direction of China’s economic development and tackling climate change…” as

China has started to establish innovation-based development. It is adjusting its economic structure, and no longer pursuing development at the cost of the environment. This new development path means that China has to lower its total energy consumption and change its energy framework to support further adjustments to its economic structure.”

Extract ends.

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BUY INDIAN AND MAKE INDIANS RICH

Reposting a link Cdr Kamaljit Jassal sent us. Cdr Jassal was the first to draw our attention to industrial promotion policies pursued by advanced countries even as globalisation was being advocated to less developed ones. He guessed that India could learn something from America’s Buy America Act. India lags behind in industrial production and technology and needs such as Act even more. America has a renewed commitment to domestic manufacturing, on which more later, as is shown in Democratic Representative Mike Michaud’s speech in which he justifiably takes great pride in American manufacturing, and shows a commendable commitment to promote indigenous products.

Extracts from Rep. Michaud’s speech:

“Right now, we send millions of dollars — and potentially American jobs — overseas when we purchase footwear for the brave men and women serving our country. But Acting Deputy Secretary of Defense Christine H. Fox recently …let me know about a shift in Department of Defense policy as it relates to the procurement of athletic footwear for our service members — and the decision is nothing short of a huge win for American manufacturers.…it just never made sense to me that we would give our service members products that were produced by foreign countries — sending millions of taxpayer dollars overseas at the expense of hardworking Americans here at home.

The policy change relates to the Berry Amendment — which essentially requires DoD to give preference to American-made products when procuring goods for our service members. For a variety of reasons, DoD has not been able to adhere to the Berry Amendment when it comes to athletic footwear — until now.

Manufacturing is a big part of our state — of our heritage and of our economy. I understand the pride that goes into producing high-quality products that can be shipped out, bringing in important revenue in return. That’s why I’ve pressed so hard on this issue.

This also is important to me because one of the companies capable of producing high-quality, American-made footwear for our service members — New Balance — employs about 900 people in my home state. …Creating more manufacturing jobs in this country invigorates our communities and our economies, and it sends a powerful message about the strength of the American worker. …

DoD’s commitment to American manufacturing is a powerful endorsement of that American spirit”.

Waiting for the Day when Indians start thinking like this! And yes, I didn’t know New Balance is American and it is a jolly good brand!

[Cdr Kamaljit Singh Jassal is one of the original members of the High-Tech Forum on Defence Innovation and helped to nurture it. He took premature retirement from his post as Joint Director (PP&FS), Integrated Defence Staff Headquarters, MOD, and is currently working with an NGO to promote grassroots development in the true spirit of our great Armed Forces. Email: jassalnavy@hotmail.com]

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PROPOSALS FOR ENERGIZING INDIAN AEROSPACE AND DEFENCE INDUSTRY by Commodore Sujeet Samaddar

Uploaded here - AGENDA INDIAN A&D INDUSTRY GROWTH is an excellent report prepared by Commodore (Rtd) Sujeet Samaddar, NM, Director and CEO, ShinMaywa Industries India Private Limited and member of the High Tech Forum on Defence Innovation launched at IDSA.

To encourage indigenous high-tech manufacture, he has outlined several measures that would help provide a level playing field for Indian industry. Till now, the system was skewed towards PROCUREMENT, not PRODUCTION. A beginning has been made with DPP 2013, which according to a highly placed source “now requires justification for not taking recourse to Indigenous products. That needs to be followed strictly. There is already a shift towards Buy Indian on account of this but will need to be nurtured.”

So the test, as always, will lie in implementation. We have many apologists for foreign products deeply embedded in our system. It was noted at the 4th Forum meeting that the heads of 4 governments visited India to promote their jets for the MMRCA acquisition, whereas we shy away from promoting our own products and host huge air shows which promote the aircraft of other countries! This is despite the fact that Indian products are greatly appreciated far and wide.

Commodore Samaddar suggests several measures to equalize the field between Indian and foreign players, and even tilt it a bit towards Indian firms, an endeavour we fully support. No country has become strong without strong indigenous firms. 

Ideas such as a streamlined defence exports policy and “deemed exports” which will “make it attractive for foreign OEMs to contract in India and thus create capacity capability and jobs in India” are great and even overdue. So are the suggestions on amending taxation policy to encourage indigenous production, “prepared in consultation with leading tax and legal experts” and “attached separately as Annexure”. And all the other suggestions to flatten the playing field.

Please read the report, comment and send feedback to him and also yours truly.

email: sujeet.samaddar@shinmaywa-india.co.in

vistasbharat@gmail.com

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“Marry (Import) in Haste, Repent at Leisure”

“Grief walks upon the heels of pleasure; married in haste, we repent at leisure…”                                          From The Old Bachelor by William Congreve, 1693.

According to a TOI article on the problems faced by the Indian forging industry – “Indian forging entities facing Chinese threat: Survey”, the Association of Indian Forging Industry (AIFI) has published a survey that states that China is able to supply a range of crucial assemblies and components at prices 20% lower, due to Chinese subsidies for exports and better policy support, such as a more industry-and-finished-goods friendly duty structure. OTOH Indian industry has to deal with unsupportive govt policies, “high power tariffs, high octroi duties, steel prices and unavailability of good quality iron ore”. 50,000 people lost their jobs in the Indian forging industry in a short period in 2009 alone.

This story is being repeated across the board. In related news, there were reports that after having loweredcosts and wiped out local suppliers – Chinese suppliers and the crashing Rupee led to a hike in the cost of raw silk supplied to Bhagalpur weavers, who are struggling to survive even as their beautiful products clothe the elite (they want to charge the Rupee with murder). The Indian silk industry is fighting back with a “swadeshi” movement, spearheaded by a dedicated official in the Silk Board – Shri K.K. Shetty, Joint Secretary at the Central Silk Board, which functions under the Ministry of Textiles. But it continues to face serious hurdles.

Comments

  1. May more stories multiply of Indian manufacturing regaining competitiveness and market share at least in their own country through the help of dedicated officials.
  2. The Association of Indian Forging Industry should make it easier for entities like Vistas Bharat or anybody for that matter – to contact them. The “contact us” button on its website is non-functional. They should upload the report on their website to give it wider publicity. The Media section is full of desperate pleas to save the Indian forging industry, which together with machine tools is the foundation of hard core manufacturing. Hardly any of it has appeared in the mainstream press.
  3. Check out this nice website dedicated to finding solutions for alleviating poverty: Money Well Spent. org
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