What is the issue?
- Defence Secretary Sanjay Mitra had said at the recently held “DefExpo” that the Strategic Partner (SP) policy was still at a preliminary stage.
- Notably, there are fundamental flaws in the current Strategic partnership (SP) policy and it will definitely take a few more years for orders to commence.
What is the Strategic Partnership (SP) Policy?
- The intention of the “SP” policy is to promote the private sector to primarily manufacture – fighters jets, helicopters, submarines and tanks, in India.
- The partnership envisions facilitating technology transfer from a foreign ‘Original Equipment Manufacturers’ (OEM) to a local partner on agreed terms.
- This will aid Indian firms to access the technical knowhow on weapons manufacturing while also simulataneously boosting foreign investments.
- Notably, to bring a spread in skills among many firms, the policy mandates only one class of weapons to be manufactured by one local partner.
- The process designated to select a SP is long and arduous and nominated firms must demonstrate its financial and technical potency to be selected.
What are the challenges?
- It is a fact that even the most strong of Indian firms dont currently pocess the capability to build sophisticated military hardware.
- For example, building a warship demands expertise not just in welding, fabricating, plumbing and wiring.
- More specifically, establising a battle ready platform requires expertise in high-tech propulsion systems, environment management tools and sensors.
- Notably, public sector shipyards like Mazagon Dock and Garden Reach took almost 50 years to aquire the current level of expertise to build warships.
- Similarly, even Hindustan Aeronautics, which is the only Indian company capable of manufacturing fighter jets, had taken decades for the achievement.
- These public enterprises literally began with nuts and bolts and simple sub-systems, and then graduated to more complex systems.
What is the risk of rushing through with partnerships?
- In the urge to quickly build private sector capability, the SP policy seems to be demanding unreaslistic technological capabilities from aspiring firms.
- Even with the best of intentions and handholding from foreign OEMs (foreign firms), Indian firms will be hard-pressed to build a modern fighter or frigate.
- SP projects require at least a 40% indigenisation, but the most costly components like propulsion systems and sensors will have to be imported.
- This implies that a large amount of fabrication and final integration has to be done in India to meet the 40% indeginisation target.
- All this would mean an undesirable dependence on the foreign partners to compensate for the slack by the local firms.
What is the way ahead?
- Aspiring Indian defence firms like the Tata group, L&T, started manufacturing relatively simple components and then graduated to sub-systems and systems.
- These firms seem to be on the right track and they can eventually graduate to manufacturing fully finished equipments.
- But the government needs to be realise that if this process of gradual evolution is rushed beyond a point, it will become counter productive.
Source: Business Standard
