Thursday, November 6, 2014

Exclusive! Gaps in ‘Make in India’? What’s overlooked in DPP 2013?


Neelam Mathews
Nov 6, 2014

Theoretically, it’s a great concept. Let Indian companies be the prime bidders in partnership with OEMs for mega defense projects like the Avro replacement and now Army/IAF helicopters for which an RFI has been released.

However, the practical aspect is far behind. The feeling I’m getting is there isn’t too much enthusiasm by the Indian industry that had opposed the higher FDI limit in defense. Reasons? Unless there is accountability by an OEM, how can the industry take responsibility for the quality of the end-product? As far as the OEM goes, how will it feel comfortable in committing delivery to its partner with little say in the supply chain if it has no ownership and zero confidence in the capability of an industry that is in its infant stage?

So, is there a solution? Many are advocating a return to DPP 2011, that allows bids to go to OEMs despite unattractive offsets. By the way, the new government really needs to ensure offsets are made retrospective for Indian industry to draw major benefits as large duty contracts are already drying out.

Time will tell whether this opinion should be taken into account. But it doesn’t hurt to ponder on it. 

Take the helio bid for instance. At the moment, given the complicated manufacturing process, one can only see one partner OEMs would like to tie up with- our dear dependable HAL! Not that there’s anything wrong with it. But it defeats the purpose of getting the private sector involved in a dynamic industry. Like I said before, large procurements are running out.

We could learn a lesson from the navy that opened ship building to private operators a few years ago. Today they are talking of  nuke subs. 
Yes there were some misses. Let us learn lessons from it. 

All one is saying why not tread slowly and then go full agog?

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