India's Poor Industrial Partnerships

Discussion in 'Defence & Strategic Issues' started by Zarvan, Apr 29, 2016.

  1. Zarvan

    Zarvan Regular Member

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    [​IMG]
    Noah Seelam/AFP via Getty Images

    A member of the Central Industrial Security Force puts down her rifle following a ceremonial parade in Hyderabad, India, on Sept. 8, 2015.

    NEW DELHI — India's efforts to cut imports and boost homemade weaponry and equipment has hit a major roadblock, as the domestic, private defense industry is sharply divided over a not-yet-implemented policy that seeks to identify a select few private sector defense companies to be named Strategic Partners (SP), who could then be nominated to big ticket defense projects.


    The nomination process is run by the Ministry of Defense (MoD). If the policy is adopted, it will change the way weaponry is acquired in the country.

    The controversial policy had been recommended by a select panel nominated by the MoD, under the chairmanship of former Defense Research and Development Organization (DRDO) chief Vasudev Aatre.

    Now, the private defense industry is divided over the selection criteria and the need for such a policy. An MoD source said the policy's consideration could be postponed, given the fierce opposition from various sections of the domestic industry.

    "The very fact that the Aatre report, which seeks to detail criteria for selection of SPs, has been made public (April 19) — after the formulation of the Defence Procurement Policy DPP-2016, end March 2016 — suggests that the selection of SPs has been delayed," said Nitin Mehta, a defense analyst in India.

    A senior executive with the Indian lobbying agency ASSOCHAM, or the Associated Chambers of Commerce and Industry of India, strongly opposes the policy move on creating select few SPs.

    "A valid interpretation of SPs is that it will give the MoD an official process to outsource its defense procurement in key sectors, to select large private sector groups via a sophisticated nomination process," the executive said. "If this interpretation is valid then it is a cause of concern."

    Another executive with a domestic defense company said the policy on SPs will lead to the creation of "tiers" among domestic defense companies, relegating the small and medium enterprises to only outsource at the mercy of the selected SPs. The selection criteria of few SPs from the private defense sector is likely to remain controversial, the executive added.


    Amit Cowshish, MoD's former financial adviser, said: "I am not quite convinced about the need for preselection of strategic partners (SPs) by MoD for Buy and Make cases, which is what the Committee of Experts has recommended. While much will depend on the fine print of the scheme, which is yet to be notified, [prima facie], it is not going to be easy for MoD to implement it unless strong costing and audit mechanisms are created. The process of selection itself may get mired in controversies."

    Aatre Recommendations

    The Aatre Task Force in its April 19 report divided the defense industry into two categories and recommended that preselected SPs by the MoD should be entitled to only one project in the first category and up to two projects in the second category.

    The first category includes aircraft; helicopters; aero engines; submarines; warships; guns, including artillery guns; and armored vehicles, including tanks. It's been suggested that only one partner should be finalized for these.

    The second category includes metallic material and alloys; nonmetallic material, including composites and polymers; and ammunition, including smart ammunition, for which the Task Force said two partners can be identified.


    [​IMG]
    DEFENSE NEWS

    Poor Industrial Partnerships Mar 'Make in India' Initiative


    "The big companies are very enthusiastic about it but I believe they also have reservations about the idea that one strategic partner will be eligible for only one project. Alternative models for forging long-term relationships lasting the life cycle of a product do not seem to have been considered by MoD," Cowshish said.

    The small and medium enterprises numbering over 6,000 are opposed to the concept of SPs, as they fear "the big SPs may not leave enough for them on the tray," according to Mehta.

    Anil Jai Singh, a retired Indian Navy commodore and defense analyst, said: "They (small and medium enterprises) feel that they will go out of business as the big guys will not offload enough work to them and that they will forever remain tier 1 and tier 2 companies and will never get the opportunity to grow into a prime contractor status."

    However, he said, "consolidation has been successful to a large extent — for example, nuclear submarine construction is divided between two shipyards in the US. There are similar models in Europe, too, but that template cannot be applied in our scenario."


    A, MoD official admitted it is not easy to implement the strategic partners policy because though there are several positives, the policy can distort the market dynamics and competition could get nipped in the bud.

    Email: [email protected]

    http://www.defensenews.com/story/de...strategic-partners-domestic-defense/83650076/
     
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  3. sasum

    sasum Atheist but not Communists. Senior Member

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    This talk of 'Strategic Partner' is laughable. This will immediately be challenged in the Supreme Court and got struck down. But Govt. may informally favor a select few companies during tendering process as has happened with coal-mine, 2g spectrum auction. However, India is a matured democracy now. When Govt. throws open defence sector to Pvt industry and invites global tender, even Pakistani companies will be able to bid.
     
  4. Indx TechStyle

    Indx TechStyle Perfaarmance Naarmal Senior Member

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    Issue of Companies?
    Will be solved very soon. :haha:
    This article is really funny who talks of a permanent partner from private sector.
    It says, Indian Program hits roadblock.

    But private industries are still conducting projects, making weapons. :taunt2:
    Yes, they have disputes but they are still working.
    Can @Zarvan go as stop them?
    No.
    When everything was going well, then, this article came for referring trend that something is wrong because media can't digest containment of public. They need spice.
    But @Zarvan must be knowing where pakistan stands against these companies.
    My two questions:
    1. Has Pak any single company like TATA, L&T, GRSE or Mahindra?
    2. Get a major Indian company of a specific sector to compare with pakistani industry. Where does pakistan stand?
    Tell me. :rolleyes:
     
  5. south block

    south block Regular Member

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    defencenews very authantic Source
     
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  6. garg_bharat

    garg_bharat Senior Member Senior Member

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    I support concept of strategic partner.

    Long gestation high value contracts need such a concept.

    It will happen one way or another.
     
  7. ezsasa

    ezsasa Senior Member Senior Member

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    Strategic partner in Indian defence sector will happen, i believe this is for sure.

    Contrary to what is being touted in the media, strategic partner is going to be systems integrators. That would mean many MSME will be getting a lot of orders from these strategic partners.

    One thing I believe is that these strategic partners should not try to manufacture every component themselves. As long as this is part of the policy, defence industry will stand on its own.
     
  8. sasum

    sasum Atheist but not Communists. Senior Member

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    Nobody will tolerate crony-capitalism. Does BJP want to ensure that it's flow of party funding/ election-expenses is permanenly taken care of by these SPs ? It will also compromise the security of the nation. What if those chosen few do not cooperate with Govt during war-time in order to extract some benefits like tax-relief ?
     
  9. sasum

    sasum Atheist but not Communists. Senior Member

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    Mods please delete the post. Pornography not allowed.
     
    Last edited by a moderator: Apr 30, 2016
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  10. Kunal Biswas

    Kunal Biswas Member of the Year 2011 Moderator

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    Title was misleading ..

    Carry on ..
     
  11. OrangeFlorian

    OrangeFlorian #GoldAndBlack Senior Member

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    Oh like pakistan has "any" industrial partnerships

     
  12. Indx TechStyle

    Indx TechStyle Perfaarmance Naarmal Senior Member

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    I guess title was like India's effort to procure homemade weapons hits roadblock.
    Did you change the title or @Zarvan did itself?
    :hmm:
     
  13. garg_bharat

    garg_bharat Senior Member Senior Member

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    Pakistani have this misconception about India. Pakistan is still an agricultural economy while India has moved on.

    Mod can give long term defence projects to private sector even without making strategic partner. People have misunderstood the concept. The benefit of SP is to create a basis for tech development in India, not merely license production. A SP makes a private company equal in status to a PSU.
     
  14. garg_bharat

    garg_bharat Senior Member Senior Member

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    Designating an SP encourages a company to create IPR as it is assured of business from MOD.

    Large corporates like Tata and L&T have spent thousands of crores to create capacity for defence production. This capacity is largely sitting idle today and waiting for orders.

    This is due to preferential treatment PSU gets in government orders. Even foreign private companies get far better treatment compared to Indian private companies due to institutional bias.

    Defence is highly R&D oriented field which requires large investments. There has to be an adequate return for the investment.
     
  15. Zarvan

    Zarvan Regular Member

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    By changing the title of this thread you Indians showed your state of denial.
     
  16. salute

    salute Senior Member Senior Member

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    paki agriculture ??? whats that ganja crops. :laugh:
     
  17. sasum

    sasum Atheist but not Communists. Senior Member

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    Opium cultivation is done under army protection in cantonments. Pakistan earns a tidy sum by selling it to international drug syndicates. Golden Crescent is alive and booming. Low quality rejects are smuggled into Punjab.
     
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  18. Rahul Singh

    Rahul Singh Senior Member Senior Member

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    Concept of strategic partner is not new and a very successful model in west. You can't have many firms bidding for collaboration in design development and manufacturing of SSNs and SSBNs, Aircraft carriers and long range missiles. These systems are of complex nature as well as being sensitive type.These products require long term planning. Here conceptualization to realization is a long process. And if one goes for open bidding for such projects, then easily forget 10-20 years before these projects are realized even at initial levels.

    Since long time DRDO had been saying that it is uncomfortable with open bidding which it has to do even at subsystem level. Just now when DRDO wanted to test its RVV-AE type BVRAAM for propulsion specific test, it goes to draft a RFI for ground based launcher. Think of time it will lose and will add to overall time of the project. And people cry over delays.

    Point is we need vibrant cluster of MSMEs and SMEs for regular products but we also need specialized firms for complex and sensitive projects. You may ask for assault rifle from different firms but when it comes to nuclear submarines you will rely on one or with special skills. And no, not all can have these skills.

    So what was the title of this thread before edit( if any)? To me even the present tile is misleading. Am sure it is same for all except to those who did not bothered to read the article through and judging its content from its tile which they are finding to their liking. Even then there are some poor fellows who have chronic comprehension problems and for that their Mad-ass-a education system is to blame.
     
    Last edited: May 2, 2016
  19. Indx TechStyle

    Indx TechStyle Perfaarmance Naarmal Senior Member

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    In fact, this title supports your dreams and favour. No matter, you guys can't manufacture anything valuable against Indian industry, you will always be seen jumping on our hurdles (won't be seen anywhere when we cross them).
    :rofl:
    Before bursting bubble of Indians, please make indigenous Moped Engines, then, talk to us.
    :taunt2:
    Diwali level ke patakhe bante nahin, aur aa jaate hain, Indian Weapons Industry pe comment karne. :laugh:
     

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