New Delhi: Dr Ajay Kumar (IAS), who is currently serving as Defence Secretary, has been the man at the forefront of many game-changing plans. India has been aiming for self-reliance in the field of defence manufacturing for a very long time now. But it is only in the last half-a-decade that things have started taking shape. There is Make In India, iDEX, MAKE- I and II, Mission Raksha Gyan Shakti, Atal Innovation Mission (AIM) and policy initiatives opening up defence manufacturing for private players in the form of open tendering. All this has together brought about a new enthusiasm in the defence manufacturing sector that was otherwise moving at snail’s pace. In a conversation with Vivek Shukla, Editor, Defence Watch, the Defence Secretary spoke at length on various issues related to defence manufacturing in India. Here are the excerpts:
Let’s talk about DefExpo first. How has the experience been so far? How far has it managed to achieve the purpose with which it was started?
First of all, let me say that since Defexpo was started, it has become a platform for global companies to showcase their products. For the first time in 2018, we did a course correction and thought, let’s showcase the manufacturing capability of India. So we started promoting India as global manufacturing hub. We got a significant response in 2018 and since then, it has been growing continuously.
For DefExpo 2020, we have got an overwhelming response from Indian companies. Now, this is not very surprising because of the kind of efforts put behind promoting India as a manufacturing hub. A lot of Indian companies have started exporting now and want to take part in DefExpo for global exposure. So I think it is serving its purpose well. This year, at DefExpo, we are making one more change and that is highlighting our cyber abilities in the field of defence.
Defence Minister Rajnath Singh has set a target of $26-billion-strong defence manufacturing industry and of achieving $5 billion exports by 2025 under the defence production policy. Is this target a tad bit over-ambitious or achievable?
I think it is very much achievable the way things are moving. See, the important thing is we have to get over the mindset of only catering to the Indian market, which is worth more or less about $18 billion. Now if I combine defence and aerospace global markets, it is more than $300 billion. So if we are going to target this $18-billion industry, we obviously will never achieve the scale. The first thing that we should do is open our doors to export in defence and aerospace. Once we start taking part in this market, we definitely will see that eyeing $25 billion in a $300-billion market is not something that is very difficult.
Private manufacturers from various platforms are alleging that India does not have an even playing field for the defence manufacturers vis-a-vis the DPSUs. Do you agree? If yes, what are you doing about it?
Let me give you some idea about where this ‘not-so-even playing field’ might exist. Testing infrastructure is first. Today, most of the testing infrastructure is with PSUs, including DRDO, BEL and HAL, etc. In case private manufacturers require a testing centre, they have to go to these PSUs and most of the times, they are accorded low priority. So we are coming up with testing infrastructure which will be run and managed by the industry and that will be used by the industry as per their testing requirements. Second, comes, taxes.
Earlier, PSUs were given tax concessions while private manufacturers were not. Around two years back, a level playing field was created in this area as well. Now everyone is on the same tax structure. The third is, in terms of orders. Now, we have opened up the tendering process. Here, everyone has to compete and whoever gets it, gets it on the basis of merit. In MAKE-II, we have gone a step further and we have opened development to the private sector. However, there are orders of very large scale where you have long-term commitments, like fighter aircrafts and bigger scale production. In these areas, we are working on a strategic partnership model so that we are able to bring in the private industry.
DPSUs like HAL are struggling with cash flows, awaiting clearance of dues from the Indian Air Force which is sitting on around Rs 15,000 crore. Are we looking at a permanent solution to resolve these issues because steady cash flow is important to sustain businesses?
This cash flow thing is a temporary situation which happens from time to time because of certain commitments. This will come and go and I don’t think it is going to be a long-term situation.
India has been comparatively slow in adopting new technologies in the defence sector. How does an event like DefExpo play a role in preparing the industry for change?
I think this is exactly the objective. When you put up a theme, you want to encourage the industry and your people in that direction. In 2020, we want people to focus on technology and move towards cyber technology. Indians have largely been dependent on global technologies. And this needs to change. There is an increased focus on technology. And we have told all defence PSUs and OFBs that you are not only production units, you have a lot of talented people who have been working in the area. There are too many people who are specialists but have never been tasked to do R&D, even when they have some ideas. So, we challenged them and asked them to innovate. We called this entire campaign, Mission Raksha Gyan Shakti. And the outcome has been overwhelming.
Last year, we had 730 patents filed by defence PSUs who are non-technology organisations, if I may use that term. We have now come up with iDEX where startups have been mobilised and the response has been so overwhelming that even foreign governments, like the United States, want to work with us, take technology from us because this kind of work is not happening there. We have reached a level where Made-in-India technology is of global interest otherwise technology was always a one-way traffic. We used to get it from outside and couldn’t export what was our own.
Media reports have claimed that the government is considering putting PSUs out of the purview of the Defence Ministry?
I am not aware of any such thing.
And what would you like to say about Defence Watch?
I am really very happy that we have this kind of initiative being taken by PSU Watch. This will definitely encourage our PSUs to do more in the area of defence. In fact, I must mention that three of our PSUs are among the top defence companies in the world — HAL, BEL and OFB. Defence PSUs are a 2 lakh-plus family. Your work reaches all of them. And I really appreciate it.