qtech_logo_t

STRATEGIC PARTNERSHIP MODEL ON RUR WAY

The idea of the Strategic Partnerships model was simple, a foreign and Indian manufacturer would share technology and knowhow for building a defence manufacturing ecosystem in the country to create capacity and infrastructure for the selected defence segments. However, like RUR, two years down the line the policy is still to roll out and there are stumbling blocks delaying implementation.

The Indian attempts to create a domestic defence industrial base is one of missed opportunities, extended deadlines and glaring inefficiencies has become the hallmark of  policy in defence Production. The Strategic Partnerships model proposal envisaged to harness strengths of private industry to create capacity and infrastructure for the selected defence segments over and above existing in the defence public sector units. The idea was simple, a foreign and Indian manufacturer would share technology and knowhow for building a defence manufacturing ecosystem in the country. The model to promote private participation in the defence sector was to be a game-changer. The  private sector was to get the opportunity to shine and come on par, if not exceed the levels of the defence public sector along with the big business houses, the medium and small enterprises will also benefit greatly. Hence, it needed institutionalising a transparent, objective and functional mechanism to encourage broader participation of the private sector in defence manufacturing under the 'Make in India' framework.

The policy was expected to be implemented in a few selected segments to begin with, namely, Fighter Aircraft, Helicopters, Submarines and Armoured Vehicles. Additional segments were to be added later on. The partnership model broadly involves creating two separate pools of Indian private companies and foreign OEMs, floating a tender for programmes and allowing the Indian companies to tie up with a foreign OEM to bid competitively. The advantage of the model was that the private sector was not to compete with the public sector and will be given an opportunity to come at par with them. Two years down the line the policy is still to roll out and there are stumbling blocks delaying implementation, which have a negative impact on the Armed Forces as the programmes gets delayed.

Government identified four segments under Strategic Partnership Model, P75(I) submarine, Naval Multi Role Helicopters (NMRH) , Naval Utility Helicopters, Future Ready Combat Vehicle and Single-engine fighter aircraft. Progress so far is enumerated in the Table:-

Today, if we sign up for a programme with a foreign OEM on SP Model after selection of partners, the earliest the arrival of the first platform into the Armed Forces will not be before 4-5 years. Post selection a contract could potentially be signed within the next 2 to 3 years. Then the production facilities will need to be set up, however it may well be possible that the initial lot of platforms come in a fully finished condition from abroad, while the facilities are being set up here.

The “Strategic Partnership Model” was meant for  creating capacity in the private sector over and above the capacity and infrastructure that exists in the DPSUs.  Now DPSU like HAL are also being considered and  the DRDO which had no role is likely to enter in  SP model, hindering “Make in India.

Procedural Issues

Issuing the RFI is just the initial stage of long procurement procedure with chances of being derailing at each stage. The Armed Forces hopes to get weapons and ammunition in the reasonable time frame with issuing of the RFI and the process get derailed at the drop of a hat. The problem is not with the OEMs or industry, but the policies are not functioning well. Delays, re-issuing and cancellation of deals disinterest the OEMs as all the process takes time and funds. In case the procurement is not progressed, announcing 'Defence Corridors' for the private industries which does not have projects and order to manufacture, has no meaning.

Till date government has also been making many policies and planning to boost indigenization, so that import bills can be cut-off, making India self-reliance. Make in India, Private-Public partnership, defence procurement policies and now strategic partnership route, all have failed to attract OEM to develop product in India, on its terms. Seems like even government is reluctant to move ahead with this route, the mere fact that the definition of strategic partners has gone through so many rounds of amendments and interpretations that its very concept is now on shaky grounds. The concept of RUR also came with lots of fanfare but shelved due to policy paralysis. The worry is that the “strategic partners” concept should not lead the same fate.

Comments are closed.