As Indian Defence aims for self-reliance, private sector seeks level playing field

G Balachandar Chennai | Updated on August 07, 2020

DPEPP 2020 suggests a more bottom-up framework to empower defence PSUs achieve greater scale by expanding the role of the private sector

As the Indian government has come out with a blueprint for self-reliance in Defence procurement, Indian private sector is seeking a level playing field with some actionable measures for its active participation in fulfilling the twin objectives of self-reliance and exports.

Private sector players have lauded the government’s draft Defence Production and Export Promotion Policy (DPEPP) 2020 as a well-structured apex level policy document which is in-line with the ‘Atmanirbhar Bharat’ goal. The draft document has clearly-defined goals and high-level strategies for indigenous R&D, production and exports in the Defence sector.

The DPEPP 2020 suggests a more bottom-up framework to empower system integrators (defence PSUs) achieve greater scale by expanding the role of the private sector.

The share of the private sector has been steadily increasing with participation of more players and it accounts for little over a fifth (₹17,000 crore) of the Defence industry (₹80,000 crore).

“It was the industry’s demand that the Ministry of Defence implement and operationalise the draft Defence Production policy 2018 with some of the goals. The draft DPEPP now combines the Defence Production Policy 2018 as well as the Export Guidelines in the form of a single policy document. This will focus on Defence production for India as well as for export markets,” said Jayant D Patil, Whole-Time Director & Senior Executive Vice President (Defence & Smart Technologies), Larsen & Toubro Ltd, which has been in the Defence business for more than three decades and has established significant indigenous capabilities.

To enhance the role of private sector in the domestic defence supply chain, several initiatives have been proposed. The policy has tried to address two major concerns – import of major weapons and procurement visibility.

However, Patil pointed out that without a level playing field in letter and spirit, the private sector cannot truly contribute towards achieving the goals of DPEPP.

“We would have liked to see a policy document like this to mention that private sector players will have level playing field on par with the government-owned defence PSUs and demonstrate the same through measurable actions.

“Need for such an inclusion in the DPEPP is highlighted by the fact that officials have preferred to direct friendly country requests for imports from India to Defence PSUs even when track record existed with the private sector and where the private sector had previously exported the goods to another country,” he added.

Ashok Leyland, one of the largest mobility suppliers to the Indian Defence sector for over five decades, stated that DPEPP 2020 policy is in the right direction.

“We see the DPEPP 2020 as an opportunity for us, as we can be part of any wheeled mobility solutions which can be delivered with high standards to any of the equipment or tactical vehicles. Recently, AL has ventured into tactical/armoured vehicle solutions and developed bullet-proof vehicles. We are expanding in these areas and will stand to benefit from DPEPP 2020,” said Vipin Sondhi, Managing Director & CEO, Ashok Leyland.

However, he felt that implementation of the new policy would be vital in realising the objectives.

“To indigenise, we need to have one nodal agency for approvals and the process should be time-bound. Trials to procurement are a long lead process and that should be reduced to help implement and promote Make in India. Also, the private industry spends a lot on R&D and trials, but only one OE gets listed as L1. If this issue can be addressed, it would be helpful,” said Sondhi.

Several private sector players like Bharat Forge and Sundram Fasteners are keen on tapping the emerging opportunities in Defence. Sundram Fasteners has set up a subsidiary to focus on the aerospace and Defence segments. It has orders for forged, cast and machined parts for all-terrain and land systems vehicles for Defence.

In the aerospace segment, Chennai-headquartered MRF has emerged as a key player in the supply of tyres to Indian Air Force. It has started supply of tyres to advanced fighter jets like Sukhoi as part of an indigenisation programme.

Published on August 07, 2020

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