STRATEGIC PARTNERSHIP MODEL

In a move to allow private investments in mega defence manufacturing projects, as mooted in the revised Defence Procurement Procedure (DPP), top executives from leading Indian corporates in the defence sector have been invited by the Ministry of Defence (MOD) to lead panels for suggestions on its strategic partnership models.

Soon after the receiving the convening order from the MOD, FICCI, CII and ASSOCHAM have appointed top executives to head the five subgroups for which recommendations have been sought. These include top executives from Tata, Larsen & Toubro, Bharat Forge, Alpha Design (recently tied up with Adani Group for a defence project) and MKU, a company that specialises in Ballistic protection devices. Each sub group is likely to have about 15 industry representatives. Two major defence sector companies which did not find a place in heading any of the panels were Mahindra and Reliance Defence. They are however likely to find a place among the industry representatives in the subgroups. Here too, given the large interest in the defence manufacturing sector which the private sector is now evincing consequent to the opening up of this sector, there is a scramble amongst private industry to be represented in the subgroups, which is making it difficult for the industry bodies to accommodate all requests. The panels on the five sub groups are being led as under:

  • Aircraft and Helicopters Manufacturing: Sukaran Singh, CEO, Tata Advanced Systems Ltd. • Submarine Construction: JD Patil, Defence Head, L&T
  • Smart Ammunition Production: Neeraj Gupta, Head MKU.
  • Armoured Fighting Vehicles: Col (retd) HS Shankar, Chairman, Alpha Design
  • Macro issues (selection of partners, criteria for evaluation): Rajinder Bhatia, CEO, Defence and Aerospace, Bharat Forge. The panels will have adequate representation from the Armed Forces as well as from the DRDO.

RAFALE FIGHTER PLANE DEAL AND OFFSETS
The deal to purchase 36 Rafale aircraft in a fly-away condition from France is likely to be sealed shortly. The estimated cost of the deal is about 7.89 billion euros and entails a 50 per cent offset clause.Under the offset agreement,discussed in 2015, 30 percent of the offsets would entail a commitment for military aerospace research and development programmes and the rest 20 per cent for making components of Rafales in India. The offsets will be carried out by French companies Safran, Thales, MBDA and Dassault, all part of the Rafale project. As part of the offsets, France has offered to help India revive the unsuccessful Kaveri engine project for the indigenous Tejas aircraft and a host of other high-end collaborations. Tejas currently uses an American engine. An upgraded Kaveri engine with 90 kN thrust compared to the existing 72 kN can be developed with French cooperation, to replace the American engine used by Tejas. This gives France an opportunity to have a bigger share in the Indian defence market as also a hope that India will eventually go in for more Rafale aircraft, possibly under the ‘Make in India’ route. France has also offered to provide stealth, radar and thrust vectoring for missiles technologies besides others to DRDO and domestic defence firms. Concrete talks and a subject wise clearance of offset proposals will however start only when the final contract for the Rafale fighter aircraft is signed.

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