Meaning of indigenisation:
Indigenisation is to innovate, develop and continuously improve the function of any system locally, in order to provide lifelong service and support; aiming towards self-sufficiency and developing strategic capability at a reasonable effort, time and cost. In other words, indigenisation signifies to substituting any imported item or product with one that is manufactured within the country, resulting in reducing bought-out component and thus less dependency on other nations.
Changes brought in Defence Procurement Procedure (DPP) introducing categories under indigenously designed, developed and manufactured (IDDM) would help in expediting indigenisation process and ‘Make-in-India’ in a real term. To make it commercially viable and sustainable, the system developed should cater for domestic and global requirements.
Pool of experts
It is necessary to have expertise in all the relevant sectors to take up any indigenisation task. A large pool of technologists possessing domain expertise, technicians, academicians, scientists and research scholars are now available within the country. The aerospace & defence community in India has the potential and capability, which needs to be brought together and supported at every stage of development. If we further improve our working environment and culture, we may attract Indians (a) who are working abroad and (b) who are planning to migrate to other countries.
It is important that organisations like defence PSUs, ordnance factories, Defence Research and Development Organisation (DRDO), Indian Space Research Organisation (ISRO) and Council of Scientific and Industrial Research (CSIR) who have individually contributed significantly to build this nation; work as a team for specific project/ technology development by utilising infrastructure and knowledge available with each of these giant tech-temples. This will certainly pave path for India to show its might and soon become a technology hub.
Issues with ToT contracts
Though the import from foreign OEM is the easiest and quickest way to fulfil the requirements, but to execute ToT contract and maintaining operationability of equipment has always been a challenge. Once a platform / equipment is imported, either direct or manufactured in India under ToT, the dependency on foreign supplier continues for decades and also we never get the best of technologies and adequate support.
A large number of spares and system would continue to be purchased from the distant supplier, at unreasonable cost. In most of the purchase contracts, there will be a clause of ‘minimum order quantity’ resulting in non-moving inventories of unwanted and obsolete parts and sub-assemblies. Equipment and their sub-systems would still be serviced at the OEMs abroad under a tag of ‘proprietary technologies’, involving considerable cost and time.
Such contracts hardly provide any details of design of the parts and systems. OEM may pass on incomplete and obsolete design. They also may not share the Defect Investigation reports and modifications done at a later stage, which are necessary for bringing improvements in functional quality of imported equipment. Sometimes repair and overhaul technology might not have been prepared, since OEM would not have reached to that stage of operational life.
Tooling drawings may not have been updated, even though tools were modified at their end. All these practical issues result in delays at every stage of production, leading to poor serviceability of our final equipment / assets. Indigenisation of any item is a time consuming and painful process but once we succeed, the above mentioned difficulties will not arise.
Offset is a powerful tool which definitely has the potential to encourage and speed up indigenous manufacturing and service sectors. Offsets of more than $ 10 billion were projected at various forums and platforms in last couple of decades. Offsets so far have been the lost opportunities for Indian industries. Though the policy has been amended a number of times, but the lack of transparency, clarity and effectiveness in the offset clauses and its implementation have been obstacles in gaining the desired benefits. Domestic manufacturing industry could have gained by exporting a large variety of parts and services under offset clauses in major purchases. It would have taken them to a different level of managerial and tech skills. Further, sub-clauses in our policies, which allow the qualified-vendor to escape from offset, need to be altered.
Conclusion and Recommendations
Cultivate and support sub-sectors such as design, manufacturing (structure, precision parts and composites), systems (power-plants, hydraulics, fuel, electrical, electronics, materials, coating and painting, special processes), tooling, test benches / rigs. Educational Institutes such as IITs, IISc, NITs and private universities should be entrusted with continuous innovative and R&D work in specific fields. DRDO can monitor this task and it’s associated funding. This gold mine is mostly being utilised by our competitors.
Capacity and capability of private industries are unlimited hence a cluster of private industries, DPSUs and OFs can be assigned with few selected programmes. In recent past, some of the projects have been assigned to private sectors but much more is to be done at a quicker pace.
Strategic Partnership Model, which permits Indian industry and foreign OEM to work together, will work fine and hence should be encouraged.
Looking at the urgency to restrict import of systems, a high-level group comprising educational institutes, DRDO, CSIR, ISRO, DPSUs, OFB, CII, FICCI, Society of Defence Manufacturers and the MoD should meet on a regular basis and review progress on indigenisation of systems and sub-systems with a focus on time-bound reduction in import content in each of major projects of Aerospace and Defence. The advisor in the PMO should preside over the meeting and issue guidelines. It is time to realise the problems in import and ToT contracts, though some individuals feel more comfortable with such arrangements. It is never late to get up, start running and be a winner.
The writer is Managing Director at Bangalore based ‘Aseri Defence & Aerospace Consultancy’, and former GM (Indigenisation) in HAL. He also served in private aerospace industries at a level of VP / CEO