Make-in-India and Modi’s France visit: There are two good news emanating after Modi’s visit to France that may help Make-in-India drive worthwhile. As expected, after off-the-purchase of 36 Rafale aircrafts, Dassault will, in near future, set up an independent manufacturing facility in a joint venture with HAL or more likely with one of the Indian private companies such as Tata Advanced Systems. TAS is already a reliable vendor in business of manufacturing aircraft components.
In another deal with Arevas for the Jaipur Nuclear Plant, the L&T is expected to get orders for making heavy and critical components such as pressure vessels and steam generators for the plant to cut down the cost of the plant. These orders will be executed by L&T Special Steel and Heavy Forgings (LTSSF), a joint venture between L&T and the Nuclear Power Corporation of India in its manufacturing facility in Hazira, Surat. “Localisation may bring down the tariff at Rs 7 per unit (kWh).”LTSSHF is recognized as India’s largest integrated steel plant and heavy forging unit. With state-of-the art facilities, LTSSHF is capable of producing forgings weighing 120MT each. India and France both will be benefitted if the deals go through.
French defence major Dassault Aviation may be entering into a joint venture with state-run HAL or any private player to set up a base here for augmenting its existing production line. The production rate of Dassault Aviation for Rafale stands at about 1 aircraft per month. However, the company has bagged three major contracts this year totalling to 84 aircraft, all of which have to be delivered fast. Under the original deal, 18 Rafale jets were to be bought off the shelf while 108 were to be manufactured by state-run Hindustan Aeronautics Limited (HAL)or in a JV with some private company.
I get amazed to read that the Indian electronic system design and manufacturing (ESDM) market will grow from $76 billion in 2013 to $94 billion in 2015. India as a country was always good at semiconductor design. However, India does not have a fab to manufacture chips. Several efforts were made to get into getting fabrication factory, but everything failed. I was amused to know that a start up called Cricket Semiconductor with a logo that resembles the traditional red leather ball, would set up a Rs 6,000-crore fabrication unit in Madhya Pradesha start up plans to set up a unit. However, I seriously suggest that the government must intervene, find out from biggies like Sunil Mittal of Airtel or Ambani brothers with big presence in telecom if they will be interested to get into the business. If they are not interested, the government must pursue a company such as Samsung to setup a unit giving all it asks for. India must take this strategic decision. It is a shame that the country has no fabs to manufacture chips just as yet. If over the years countries such as Taiwan, Singapore, Malaysia and China can have fans to manufacture chips, why should not India be a major manufacturer? With a prediction for the industry is to touch $400 billion by 2020, it will be prudent to have it soon. Interestingly, many reputed electronics companies have already their manufacturing bases in India. Hyundai, Samsung Electronics, Posco and LG- are all household names in India. These and many other companies are just to expand their footprints in India, and make India their second important manufacturing hub.
Years ago, I had visited an ordinances factory on Jessore Road in Kolkatta. The purpose was to see its manufacturing facilities that machine bore with very large length and diameter ratios. It is surprising that India is still not indigenously producing the big guns and system such as Bofors ones.
According to a recent report, “an Indian 155 millimetre, 45-calibre artillery gun called the Dhanush has cleared its field trials and is ready for manufacture in numbers.” If everything goes alright, it may take still years for India to become a reliable enough manufacturer with globally competitive product in the required number.
Interestingly, at least two private companies have shown intensive interest in manufacturing of artillery systems.
Bharat Forge has invested heavily in setting up a plant to manufacture artillery systems. As reported, Baba Kalyani group has bought not only an artillery factory from Swiss firm RUAG and set it up in India but also purchased technology from an Austrian gun manufacturer to jumpstart its entry into the defence manufacturing sector.
Punj Lloyd is another company ready to enter the major league of defence manufacturers with an investment in a manufacturing facility at Malanpur.
However, perhaps the army is not ready to use indigenously manufactured equipment very happily. None of the India companies have got any order.
Even after all these progresses, there is hardly any road map or time line for finalisation or testing for the howitzers. Instead very recently the government announced the acquisition of 145 pieces of M777 Ultra-Light howitzers from the US under a government-to-government deal. There was no mention for making these American howitzers in India, though the company had offered to shift the manufacturing and testing facility from Hattiesburg, Mississippi, to India. Unfortunately, even after the make-in-India mission, the mindset has hardly changed for the switchover. Even if it is there, the speed is dismally unrecognisable.