May - 2013 ISSUE

Force Magazine

Today, We Are Very Proud to Say That 75,000 Stallions are Deployed by the Armed Forces all Over India

Ashok Leyland’s vice chairman, V. Sumantran and executive director, defence business, Nitin Seth

Ashok Leyland’s vice chairman, V. Sumantran and executive director, defence business, Nitin SethBy his recent letter to the Prime Minister, urging increase in foreign direct investment (FDI) in the defence sector, Union minister for commerce and industry, Anand Sharma has literally put the cat among the pigeons. As an Indian private sector company, how do you view his suggestion?
We have all seen the limited progress that the indigenous defence industry has made in the last few years. I think the gap between what we need as a country and what we are able to generate internally — in terms of the cumulative means spread across the spectrum of land, sea and air — is growing. We have had this policy in place for a few years now stipulating 26 per cent FDI, but it has not brought in the kind of investments that were envisaged, so a change in that policy is probably warranted.

The defence minister has laid out three priorities: urgent modernisation of the armed forces; urgent indigenisation of the defence equipment; and urgently induct the private sector in the defence framework. These, I believe, will be the contributing factors towards the revision of the FDI limit.

How will the Indian private sector companies benefit from the increase in the FDI limit?
If you look at the history of industrialisation in India, then my own company started with the ownership of British Leyland. Over time we assimilated and today are a 100 per cent Indian-owned company. If you look at Tata Motors, they started with Daimler Benz. It is not incorrect to say that in the beginning to stimulate industrial activity, a dose of foreign equity is useful. We really need to work out a long-term way to chart this course. China has done this very successfully by flexing its economic muscles. In India, we need to find a way within the democratic framework and the dynamics of the market forces.

From a foreign OEM’s perspective, why do you think they will be interested in investing in the Indian defence sector?
We have seen global companies rushing to China, despite greater risks associated to their investments. We have seen this in sectors, such as automotive, aerospace and so on. The second point is that many original equipment manufacturers are realising that their home markets are not big enough to sustain the manufacturing. And frankly, in some of the recent programmes, for instance, the Avro replacement programme, it has been made obvious that the production lines that the global OEM creates in India can also be used to manufacture cost-effective system for the global market.

What are Ashok Leyland’s interests in the defence industry?
Our interests have primarily been on ground mobility and logistics support. We have been the largest suppliers of trucks to the Indian Army. Today, we are very proud to say that 75,000 Stallions are deployed by the armed forces all over India. Probably, it is the second largest single number plate in the world after Hummer.

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