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The defence ministry has released a new policy that seeks to boost private participation in domestic manufacturing of defence equipment.
The policy proposes one strategic partner for each platform that will act as a ‘System of Systems’ integrator and partner with not just original equipment manufacturers or foreign suppliers, but other domestic manufacturers with defence capabilities. It seeks to create an ecosystem for micro and medium and small enterprises who will contribute to the strategic partner.
BloombergQuint looked at which Indian and foreign companies currently have capabilities in each of the four platforms identified by the Defence Acquisition Council (DAC), an arm of the defence ministry that cleared the policy.
The DAC had approved the project in 2014 but the contracts were withheld till a Strategic Partner Policy was finalised. The diesel-electric engine-powered submarines will be equipped with advanced air independent propulsion (AIP) systems that allows submarines to remain under water for a longer duration. Germany’s ThyssenKrupp Marine Systems and France’s DCNS could be in the fray for the OEM status, while Reliance Defence and Engineering Ltd. and Larsen & Toubro Ltd. have capabilities to build submarines as strategic partners.
Jayant Patil, senior vice-president and head of defence and aerospace at L&T said:
L&T is the only company which participated in the construction of country’s first indigenous nuclear submarine, Arihant. “Although we don’t speak about Arihant in public, in the strategic programme we have an involvement,” Patil said.
The government has floated a proposal seeking private sector participation to build 110 indigenous helicopters under the Naval Utility Program. These helicopters will replace the Navy’s Cheetah helicopters. The programme, spread over 10-15 years, is likely to cost close to Rs 12,000 crore.
US-based Bell Helicopters and Europe’s Airbus Helicopters could vie to become partners. The third player, Italy’s Leonardo Helicopters (erstwhile AugustaWestland), has been blacklisted by the government.
In India, the Mahindra Group and the Tata Group have capabilities to build helicopters. Mahindra Defence has been supplying aerostructure parts to Airbus and in January last year, extended its partnership with the European aircraft maker to build military helicopters in India.
Tata Son’s arm, Tata Advanced Systems Ltd, tied up with Boeing in November 2015 to make aerostructures and parts for the US major’s AH-64 Apache Helicopters.
India has been looking to replace its ageing fleet of over 200 MIG-21s fighter aircraft for many years. As a short-term measure, India struck a government-to-government partnership to acquire 36 Rafale aircraft from France for more than $8.5 billion.
The off-the-shelf acquisition of Rafale was a setback to the country’s Medium Multi-Role Combat Aircraft Programme.
American F-16 fighter aircraft maker Lockheed Martin, Sweden’s SAAB Group that makes Gripen, and Rafale maker Dassault Aviation of France could be in the fray to be OEMs.
The Adani Group is said to be in discussion with SAAB for a tie-up to manufacture Gripen-E in India, according to a February report in Mint. Reliance Defence has partnered with Dassault Aviation to make aerostructure parts for Rafale aircraft. The joint venture will execute an offset obligation as the deal requires Rafale to engage Indian suppliers for components. However, while Rafale is a twin-engine fighter, the government seeks strategic partnership for a single-engine aircraft.
The government has already invited proposals for armoured vehicles under its ‘Make in India’ programme, seeking bids from Indian companies to showcase prototypes of armoured vehicles to be used by the army and para-military forces. Four consortiums including L&T, M&M, Tata Motors-Bharat Forge and Tata Power-SED have been shortlisted and are undergoing technical evaluation. The Futuristic Infantry Combat Vehicle (FICV) program has been kept outside the strategic partnership, said L&T’s Patil.
The armoured vehicle platform will primarily replace the ageing fleet of main battle tank Arjun. The government has already started replacing the old Arjun tanks with Russian build T-90 tanks. The value of orders in this segment would be upwards of over Rs 30,000 crore, he added.
Indian players shortlisted for the FICV program will bid for the MBT program. Foreign companies in the space include US-based General Dynamic and state-owned Russian firms.
(This story was originally published on BloombergQuint)
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