Geography Reference
In-Depth Information
DRDO 17 years earlier, in 1989, but had to wait till policy changes began to catch up with
the army's needs for rapidly advancing technology. 'Like Israel, India has the right skills
and low-cost design and testing capabilities to compete internationally,' Rahul Chaudhry,
chief executive of the Tata company told me at the time.
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These and other companies, however, needed assurance of a flow of orders before they
would commit investment and resources to product development, and they also needed
help with research costs, none of which was forthcoming till recently. Government officials
sometimes suggest that the private sector should have bid for contracts abroad to offset un-
certainty at home, but companies were loath to shoulder the risks in highly competitive and
complex export markets when they had not already developed expertise and sales in India.
Some now admit that they should probably have acquired foreign defence manufacturers
to gain access to technology and new markets, as the Indian auto industry has done, for ex-
ample, most notably with Tata Motors buying Britain's Jaguar-Land Rover business from
Ford of the US, but these groups had other priorities.
The Raksha Udyog Ratnas proposal would have given the companies the confidence to
build capability in India and maybe abroad but, faced with strident opposition, A.K. An-
tony shelved the proposal in 2010 after he took over from Mukherjee, who had appeared
to be in favour. Antony did so partly in response to complaints from the DPSUs, but there
was also pressure from smaller private sector defence equipment companies, which argued
that they would lose out. The crucial opposition, however, came from three trade union
federations linked to Congress, the BJP and the CPI(M), which most unusually united to
tony found these complaints irresistible, thus halting the most quickly implementable of
reforms. The only proposal that went ahead was to introduce 'offset clauses' in projects
that require foreign suppliers to buy 30 per cent of a contract in India, but Antony bowed
to foreign pressure and watered down the plans that could have forced foreign suppliers to
transfer significant technology.
Private sector progress has also been hampered by a lack of lobbying pressure in Delhi,
where the heads of groups such as Tata, L&T and Mahindra have other, higher priority
battles to fight. That could change if Mukesh Ambani, who runs Reliance Industries and
has more influential muscle than the current private sector line up, succeeds in his ambi-
tions to enter defence and become India's biggest private sector aerospace manufacturer.
As a former defence ministry official said at a private meeting attended by a Reliance ex-
ecutive, 'We do expect things to change now you are here!'
He was referring to Reliance being chosen by Dassault of France as its Indian manufac-
turing partner on a $10-15bn contract for the 126 medium multi-role combat aircraft that
has no experience by manufacturing Dassault's Rafale jets took the industry by surprise
