There Is A Need For Identifying Capability Voids: Ajay Kumar

PM Modi recently announced the establishment of two defence corridors and set an ambitious defence export target of Rs 35,000 crore by 2025. The Ministry of Defence (MoD) is gearing up to address the challenges and fine tune the policies that provide impetus to defence production in India.  Manish Kumar Jha caught up with Ajay Kumar, Secretary, Department of Defence Production, MoD to an overview on the new initiatives at DDP.

Excerpts:

The Draft Defence Production (DDP) Policy 2018 envisions India as one of the world’s top 5 defence producers by 2025. It also sets a defence export target of Rs 35,000 crore ($5 billion) by 2025. How realistic is the vision?
The value of production from OFB (Ordnance Factories Board) and DPSUs (Defence Public Sector Undertakings) put together is currently approximately Rs 55,000 crore ($8 billion). Nearly 65 per cent of the parts/components/subsystems have been delicensed and as a rough estimate, approximately $3 billion worth of defence items are being manufactured in the private sector. Thus, presently defence production would stand at around $11 billion.

This policy envisages adding another $14 billion worth of production in seven years, which translates to CAGR of 15 per cent approximately.  With the opening up of the sector and the thrust being given to the private sector, DDP believes that these numbers are attainable.
The DDP policy is expected to spur private investments in defence sector. Elaborate measures have also been proposed for export promotion.  The targets are kept on the higher side as moderate ‘incrementalism’ will not have the desired effect.

The announcement of two Defence Industrial Corridors presupposes a robust ecosystem of defence manufacturing by Indian and foreign OEMs. Can you apprise us of the development? How much does the government plan to invest?
Subsequent to the announcement of setting up of two Defence Production Corridors, the government has decided to set up these corridors in Tamil Nadu and Uttar Pradesh. For the Tamil Nadu corridor, five nodal points – Hosur, Salem, Trichy, Coimbatore and Chennai – were identified. For the UP corridor, six nodal points – Agra, Aligarh, Chitrakoot, Lucknow, Kanpur and Jhansi – have been identified.

Soon after the announcement of these corridors industry interaction with all the stakeholders were held in both the States.  

The government is in the process of appointing consultants for preparing detailed project report (DPR) on the corridors. The DPR would recommend the steps — policy initiatives, financial investment, infrastructure upgradation that would be required in each of the nodal points to facilitate the defence industry not only to meet the demands of the Indian armed forces but also to integrate themselves into the global supply chain of defence related items. These steps would also attract a sizeable number of foreign OEMs to set up their production units in these locations. The recommendations would be considered and acted upon by the government. Once these are finalised the quantum of investment required would be known.

In your statement, you have heavily emphasised the ‘structural changes’ in the defence procurement process and that is going to speed up the processes. Could you elaborate on these specific elements?
The Simplified Make-II process of Defence Procurement Procedure (DPP) 2016 has been introduced and is being further streamlined to make it easier for industry to enter in defence production sector.  More than 26 projects have been approved in principle and may proposal have been submitted suo moto by the industry.  

 Despite commendable performances by some, defence public sector units are still looked upon as laggards for their slow pace of delivery and turnaround time. How are you driving away the perceived malaise?
Our endeavour is to build on the existing strengths of the public sector but the thrust is towards moving defence production for bigger investments to come from the private sector.  
The Draft Defence Production Policy envisages infusion of new technology/machineries in OFB/DPSUs to enable them take up advanced manufacturing/development of futuristic weapons and equipment.  In any industry, investment in continuous modernisation is utmost essential otherwise the investment already made in the industry will go waste because of technological obsolescence.

We are also encouraging OFB/DPSUs to increase productivity and timely execution of orders. Greater use of IT-based systems including systems for supply chain management customer relationship management, data analytics, etc., is also being encouraged.

Disinvestment of minority stake in DPSUs is being pursued to introduce, competition and market discipline thereby releasing large amount of public resources both tangible as well as intangible.  DPSUs/OFB are also encouraged to explore partnerships so as to avoid duplication of production facilities and idling of existing facilities.

In DefExpo 2018, PM Modi announced the launch of Innovations for Defence Excellence (iDEX) which envisioned defence innovation hubs throughout the country. How many centres/hub are being planned?
We have introduced iDEX, which aims at creation of an ecosystem to foster innovation and technology development in defence and aerospace by engaging industries including MSMEs, start-ups, individual innovators, R&D institutes and academia and provide them grants/funding and other support to carry out R&D development if they have good potential for future adoption for Indian defence and aerospace needs.

We are looking at collaborating with five incubators (IIT Bombay SINE, IIM-A, CIIE, T-Hub/Hydera-
bad, Forge/Coimbatore, IIT Chennai) and setting up two defence innovation hubs (Codissia-Coimbatore and IIT Kanpur) and enter into partnership to run programmes such as acce-
lerators, long-duration incubation, piloting and prototype investments.

Through iDEX, is the MoD also planning to spur collaborations with universities/research institutes across India to support innovation and research in the defence sector? Also, what are the missing links in our innovation index as far as many critical technologies are concerned in the area of defence production?
There is a need for identifying capability voids and defining critical technologies required for indigenous research/manufacturing in consultation with industry and academia. They will provide advice regarding technology platforms/equipment/systems, which should be developed in the country in the medium and long term. Wherever required, the government will provide support for development of such platforms/equipment/systems.

R&D capability mapping would have to be done to identify defence related technologies.  This mapping should cover DRDO labs, other public sector laboratories, academic institutions and industry.