The Hindu Business Line : Defence, industry joint venture firms in offing

IN an interesting partnership between defence laboratories and the private sector, new entities called Government-owned, Company-run (GoCo's), to be managed in a professional corporate mould, are to be formed in the country.

The model proposed is as follows. The research and development (R&D) support is provided by one of the network of labs under the Defence Research and Development Organisation (DRDO). The private company produces the product. The DRDO also participates through a small equity and assures buyback, through placement of an order.

The objectives are two-fold — overcome the country's difficulties on the technology front due to the Missile Technology Control Regime (MTCR) and promote rapid development of critical technologies and bring them into the commercial markets, according to Dr V.K. Saraswat, Distinguished Scientist and Director, Research Centre Imarat (RCI).

One of the first such initiatives under this `GoCo' model has been floated with the target of indigenously developing Servo Valves, which are key components in the control system for missiles and falls under the list of MTCR, he told Business Line.

"A couple of companies have already come forward and we have got the development work going. By the middle of 2005, the joint venture would be in place and the product development by December 2005," Dr Saraswat said..

Servo Valves are virtually a monopoly product from MOOG of US, which gets it manufactured in different locations depending on supply demands. The hydraulic control device has in addition to its utility in missiles, applications in machine tools, automobiles and other machinery, he said.

Because of MTCR, India is denied several critical equipment and technologies. This model is one way of beating it. The `GoCo' becomes necessary because the requirements for some of these components are not in huge commercial numbers and cannot be imported. The joint venture could do the job on a dedicated buyback arrangement and move to other products, he explained.

Another reason for the need for such ventures is the fact that the investments required for development are limited for specific products. Therefore, the DRDO, small private sector company collaboration for a well-defined goal makes practical sense, Dr Saraswat added. Proposal to have a board of directors with members from the industry as well as a joint management system are being worked out.

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