Defence Minister Manohar Parrikar on Saturday will meet the five sub-groups, created by the defence ministry to make recommendations on choosing strategic partners in defence manufacturing. These sub-groups, headed by top officials of private Indian defence manufacturers, are expected to present their recommendations which run contrary to the model proposed so far.
As reported by The Indian Express on May 26, Parrikar had created five sub-groups to make their recommendations on strategic partnership in manufacturing Armoured fighting vehicles (AFV), aircraft and helicopters, submarines, ammunition including smart ammunition, and macro process management of issues. This is broadly as per the strategic partnership model proposed by the Dhirendra Singh Committee and the Aatre Committee.
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Scheduled for two hours, industry sources said that Saturday’s meeting is expected to witness a plethora of conflicting recommendations being made to the defence minister. The industry is unanimous in demanding a clear and transparent model for price discovery of these platforms from the defence ministry. Aatre Committee had recommended that the price discovery will be done after the strategic partner is chosen, which is making the defence industry players uncomfortable.
These sub-groups also want a clarity on firm orders that will be placed with the strategic partner so that the private company can make the investment accordingly. Moreover, industry representatives want each of these five sub-groups to be further subdivided into different segments.
“How can aircraft and helicopters be one group? Can any single company have the capacity to build fighters, transport aircraft and helicopters? How can any one company make all kinds of submarines? Ideally, these should each be separate segments with a strategic partner chosen for each of them,” CEO of a private defence company explained on conditions of anonymity.
According to another defence industry representative, “there are 7-8 distinct types of ammunition. How can any one company claim expertise or capacity for all of them?”
Another recommendation being made by the sub-groups is to look at the order book size of the product and the time schedule of delivery, as no single private Indian company can have the capacity to produce major defence platforms in such large numbers.
“Let’s say we need 400 combat aircraft in the next 15 years. Can any one company make them in that period? Please remember that even Dassault makes only 12 Rafale fighters every year. We can have more than one strategic partner in that case,” an industry representative said.
MSME representatives have recommended that the turnover threshold of 500 crore recommended by the Aatre Committee be halved to 250 crore to allow more companies to participate in the model.
HS Shankar, chairman & MD of Alpha Design Technologies, a company involved with AFVs has been made head of the AFV sub-group. Sukaran Singh, CEO & MD of Tata Advanced Systems Limited, with a stake in the aeroplane manufacturing industry heads the aircraft and helicopters sub-group.
The submarine sub-group is headed by JD Patil, senior VP and head of defence and aerospace at L&T, which already has a substantial presence in submarine industry. Neeraj Gupta, MD of MKU Pvt Ltd, a company producing ammunition heads the ammunition sub-group. The macro-process management sub-group is headed by Rajinder Bhatia of Bharat Forge.