Interview | Chairman, FICCI defence committee, whole-time director and senior executive VP for L&T’s defence business, Jayant Damodar Patil

'The Longer the Programme (P-75I) Gets Delayed, The Certainty of Mazagon Being Allowed to Bid Increases'

Chairman, FICCI defence committee, whole-time director and senior executive vice president for L&T’s defence business, Jayant Damodar Patil

The government’s ‘Make in India’ has completed three years in September this year. How much headway do you see India has made so far towards indigenisation?

The indigenous content has certainly gone up from 30 per cent to about 40. But it is far too lower than what one expected. Even today, there is not so much of momentum as far as indigenisation is concerned. The order placement on the private sector is really very low. A few big contracts have certainly happened; but not too many to make a difference. The delay in decision-making is causing enormous harm to ‘Make in India’. So, obviously, it is not as spectacular as one believed it would be.

 

Are delays the only reason behind this slow progress of ‘Make in India’ programme, or is there more to it?

Primarily, it is the decision delays which is having a cascading effect on the whole process of indigenisation.




 

How do you view the Strategic Partnership model? How different is it from the earlier Raksha Udyog Ratna concept?

The Raksha Udyog Ratna (RUR) concept was meant for development of systems and equipment within India. The fundamental point of RUR was that, for the ‘Make’ programmes the government would give 80 per cent of funding for the development of the system or equipment. And this is what is still happening under the’ Make’ programmes today.

Under the Strategic Partnership model on the other hand, the money is not directly given by the government in the form of a grant. Basically, it means that a chosen strategic partner would customise (according to the requirements of the Indian armed forces) and build an internationally proven product in India.

I would say that the Strategic Partnership model is more pragmatic in the sense that it accepts that ‘yes, you may develop your own products in the future, but till the time you do that let’s just build them here instead of directly importing them’. See, we may take another five to 10 years to develop our own products here. But in the interim, why not get a foreign partner to build those things here. I am not necessarily talking about equity-based joint venture companies, but if you are looking at fighter aircraft, helicopters and submarines, at least they can be manufactured here (thereby ensuring some amount of indigenisation); otherwise there would have been 100 per cent imports.

Hence, the SP model is essentially about transfer of technology (ToT) to the Indian partner. The higher the competency of the Indian partner, greater would be the absorption of ToT. Eventually, it will boil down to competent players who have the infrastructure in place and can leverage indigenisation. Finally, it has again become the L-1 bid. If the indigenous content is high, there is a bigger chance of it being L-1.

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