Allow 74% FDI Limit Irrespective Of Area: Amandeep Singh, Ashok Leyland

Ashok Leyland has been the largest mobility supplier to the Indian military, and is currently focusing on high-calibre armored mobility solutions. Amandeep Singh, Head of Defence, Ashok Leyland, talks to BW Businessworld’s Manish Kumar Jha about their strategic vision and plans to contribute to the defence sector, the challenges they face and the need for clear-cut policies, among other things. 

Excerpts:

Ashok Leyland’s forays into defence began in 1970.  How has the journey been so far?
We are proud of our association with the Indian Armed Forces for so long and also the fact that we are the largest mobility solution supplier to the Indian Army. For us this is not just business, but more than that it gives us an opportunity to contribute to our nation’s security. Our vehicles have successfully participated in various operations on the borders and also in the Indian Army’s UN Missions abroad. We have been providing service and training support in most difficult of terrains and conditions. We also have had a long and successful relationship with the Ordnance Factories Vehicle Factory, Jabalpur in delivering over 60,000 Stallions to the Indian Army. Lately, what is most satisfying to us is the fact that our vehicles are now replacing the ones that were earlier imported thereby contributing to the Make in India push in defence.

What is the scale of revenue that you see in the defence sector? 
We are sharply focused on providing mobility solutions on land in the defence sector. Till a few years back we operated only in the logistics vehicles part which contributed to 2 per cent of the Indian Army’s capex. We have since expanded our presence to 5 per cent of this with over 55 per cent market share. In the next 6-7 years the army’s capex is expected to touch Rs 50,000 crore per year and we plan to further expand our portfolio to the tracked vehicle business and participate in 20 per cent of this spend.

Stallion and Super Stallion are already well established in the armed forces’ mobility platforms. What is next? 
Beyond logistics vehicles i.e. the Stallion range and special role vehicles i.e. Super Stallions, we are now focused on three major business opportunities. First is the range of armoured vehicles that includes bullet proof as well as mine protected vehicles, which we have already started getting orders for and have delivered to police forces. Second, we have now ventured into repower and upgrade of tracked vehicles i.e. BMP Infantry Fighting Vehicles  and tanks, and are also partnering DRDO/Ordnance Factories Board (OFB) for indigenisation and improvement of these fighting vehicles. Third, the Indian Army is planning to outsource/privatise MRO activities of its wheeled and tracked vehicles and we, with the experience of running workshops and AMCs, are very well placed to do this.

You have the requisite experience in making and delivering high-calibre military vehicles successfully over the years. Do you see yourself diversifying to meets the needs of the armed forces? 
As mentioned earlier, we are very sharply focused on what we are going to get into and what we will not. Just because customer is common doesn’t mean that we can supply everything that they may require, which is a strategy adopted by most of the players getting into this sector. We are leveraging our core competency, which is mobility solutions, to cater to the growing requirements of the Indian Army for movement of men, material and ammunition, mounting/towing of weapon and radar systems and various frontline combat platforms. This focus gives us substantial technology and cost advantages and as a result, we have won over 70 per cent of the tenders that we have participated in the last two years.

The Draft Defence Production Policy 2018 proposes a lot of changes that could encourage private industries. Any specific recommendation that you would like to highlight?
Under the draft policy, FDI up to 74 per cent under the automatic route is being allowed in niche technology areas. Land system technologies are usually left out of niche areas and the focus is primarily on aerospace/electronics. Whereas several technology areas exist in land systems there is currently a big gap in areas like armouring, higher than 300 HP engines, tracked vehicle aggregates, etc. These should be explicitly mentioned in the policy so that there is no ambiguity later on and lengthy approvals are not required. In fact, to attract FDI, 74 per cent limit should be allowed irrespective of area.

What can the government to create a robust ecosystem for defence?
The government’s intention has been to remove purchase and production bottlenecks through policy declarations in this sector. What is lacking is time-bound implementation and provision for mitigation of single buyer risk for the private sector.

Are you also planning to set up any facility in the recently announced defence corridors?
Being based out of Tamil Nadu we already have production as well as R&D facilities in this corridor. We are willing to further expand our presence provided enough time-bound business opportunities are provided.