Defence Industry

The Contours of IDDM: A user’s Perspective
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Issue Vol. 31.3 Jul-Sep 2016 | Date : 23 Dec , 2016

It is my belief that, from such an amalgam, will rise the soul of IDDM. The recent news of hiring young IIT students for certain design assignments by the DRDO, implementation instructions of ADB getting issued by the Army, the Indian Navy scaling newer heights in indigenous design after the Arihant, the GOI, in Feb 2015, has sanctioned the construction of six nuclear-powered attack submarines to be designed completely by the Directorate of Naval Design and built by the Shipbuilding Centre at Vishakhapatnam), Tejas and beyond, the story is positive albeit with many ‘ifs’ at the moment. Also, with what I saw in the effervescent spirits of the small and big Indian players at the DefExpo, I would like to believe (with a tongue-in-cheek reality) that the decade ahead is one that belongs to the ‘Indian Design’ – the soul of IDDM.

If there is something that can really be called the soul of the entire euphoria of the new DPP 2016 anchored in the magic of ‘Make-in-India’, it is this newly introduced acquisition category – Indian Design Development and Manufacture (IDDM). I, as a humble user and the operator of the DPP for years on end that includes seven years in the flag ranks, actually handling procurements at the cutting edge and experiencing the many joys of completed cases and the frustrations of the ones fallen aside, have tried to examine the various contours of the IDDM including the take on it by a few Subject Matter Experts (SMEs) on some apparent contradictions related to IDDM when seen with other categorisations. Here it goes…..

Buy IDDM

The first point of debate among the SMEs is about the percentage of Indigenous Content (IC) required. The figure is 40 per cent on cost basis of the total value of the contract for products that have been indigenously designed developed and manufactured and 60 per cent for products which may not have been designed and developed indigenously.

Excruciating delays in decision-making and file clearing has to become history over time…

While there may be some merit in the argument that the percentage figures are quoted wrongly and these should have been the other way round since the product, that is not designed and developed in India cannot be expected to have an IC percentage higher than the one designed and developed in-house, my take is as under:

  • Percentage figures, as quoted, are correct and have an implied logic to it.
  • The lower percentage of IC will work as an incentive for a product developer to push for an Indian design rather than looking outwards for the same.
  • Talking of 60 per cent, the same will relate to a particular class and category of products. Which one? Well, experience has it that there are many a product which are at the ‘horizon of indigenous manufacture’, i.e. These are those products that we have almost indigenised except for a small portion that is still beyond our reach.
  • For example, take the case of active and passive RF seeker for a range of missiles, both surface-to-air and surface-to-surface. While we can do almost the entire missile, including the propellant and fusing, in-house, the RF seeker still remains elusive. Such products will foot the bill in this category (IC – 60 per cent).
  • While we can manufacture the latest guns, the smart ammunition capable of receiving round-to-round intelligence is beyond our capability. Some portions of the cutting-edge radar technologies (4D/AESA/capability to fire-control conventional, as well as, guided ammunition from the same platform), a bit of special materials (nano-driven), powering of laser weapons are some such areas where we are almost there. Such are the cases that will fit in IDDM 60 per cent IC category.

Another argument against the IC percentages in IDDM category has been that, given the situation today where we are 60 to 65 per cent dependent on imports for our requirement of military equipment on the whole and about 70 to 80 per cent, when it comes to aviation related wherewithal, how on earth are we imagining 40 and 60 per cent IC, as quoted above? My views are as under:

  • It is agreed up front that the percentage figures are at the upper edge of the ‘stretch limit’ of IC but that is not all.
  • Without trying to make any exaggerated/false claims, I state with conviction that the face of the Indian defence industry is fast changing. A detailed visit to the latest Defexpo 2016 would vindicate my point. I am not talking only of the big players such as TATA, L&T, Mahendra, Bharat Forge, PunjLoyd and the like. The magic is also being spun by many other comparatively smaller entities and enterprises such as Zen Technologies, MKU, VEM Technologies, Alpha Design Technologies and many more.
  • It is a little different world today with Dhanush, indigenous update of BMPII, Sarath, Ultra Light Howitzer by Bharat Forge, 155/42 calibre indigenous, 100 per cent Indian Air Defence BMC2 and AD C&R System, Rotas BMS and many more.
  • Also the foreign OEMs such as Thales, SAAB, MBDA, Rafael, IAI, Lockheed, Raytheon, Boeing, Rosoboron Group et al are becoming increasingly proactive, not only in the euphoria of ‘Make-in-India’, but also with the stated claims of ‘Made’ in India.

With all the above and more, I state the following:

  • 40 per cent category is much more feasible even with a little stretch.
  • As regards 60 per cent IC, I would like to think that it is reserved for the category of military hardware that I have tried to explain above.

The first point of debate among the SMEs is about the percentage of Indigenous Content (IC) required.

On Indian Design

Before I go further, I would like to flag a distinct emphasis on the words ID in the IDDM. I feel that in the soul of the new-found magic of ‘Make-in-India’ lies in ‘Indian Design’. It is this field that needs to propel itself. It is doing so – bit by bit, but a solid push forward is required. Not that all is well with Make-in-India; the road ahead is one of promise and not of despair. To make this promise happen, the so-called shackles and obstructions, such as the woes of the private industry, have to be removed.

Excruciating delays in decision-making and file clearing has to become history over time. Very tall order! Easier said than done!! DPP – old or new, this rot continues. While the Government (DPSUs) have infinitely large holding power, the hard cash of private players hangs in the balance with the increasing cost of capital and an unforgiving banking eco-system with private players that can actually make the IC happen waiting endlessly for a decision/file clearance/response to query and more.

The laudable and praiseworthy aim of a level playing field has to move forward from being theory to practice. A few random examples:

  • Applicability of Exchange Rate Variations (ERV) across the board (Public and Private players) and that too, in a timely manner!
  • Common and transparent norms for the public and (bona fide and selected) private players for the complete range of procurement related activities. Just a sample:

– Making combat equipment available for the development of prototypes.

– Equal sharing of national assets such as Test Ranges, Validation Labs, EMC/EMI facilities and more on payment basis, wherever applicable.

Reducing the bias for the public sector is one cornerstone of achieving the as yet-illusive level playing field. Though that is something that cannot happen overnight, that is the way forward.

Effort by Services

Returning to my point on ‘Indian Design’, it will be of interest to know what the Services are doing in this field. The encouraging news is that while one of them is right ahead, the others are making positive beginnings. In that, the Indian Navy is already a full-fledged ship-building Navy (implying many other vessel types as well) end-to-end (design, development manufacture). The Air Force is already making a beginning to have a design acumen by way of Subject Matter Experts (SMEs) cumulated for this purpose in the field. The Army has also recently completed a study to establish something of an Army Design Bureau (ADB). This is to be done by concentrating the SMEs in different disciplines such as small arms, guns, ammunition and communications in an institutional manner to be able to provide operational inputs to the design requirements of military hardware. The author has had the privilege to be the Chairman of the ADB Study whose recommendations are being implemented now.

As time passes, some things are expected to unfold gradually. How? It is to be hoped that the above small beginnings (of the Services) will start getting integrated with the rousing ‘design muscle’ of the Indian defence industry over time, duly powered by the intellect of the academia across the entire spectrum both institutionally as well as through ‘one-on-one’ and ‘one-on-many’ networks.

If the collective wisdom driven by realities on ground has it that the Indian design is not possible/doable, the procurement will slip to the next category of ‘Buy Indian’…

It is my belief that, from such an amalgam, will rise the soul of IDDM. The recent news of hiring young IIT students for certain design assignments by the DRDO, implementation instructions of ADB getting issued by the Army, the Indian Navy scaling newer heights in indigenous design after the Arihant, the Government of India, in February 2015, has sanctioned the construction of six nuclear-powered attack submarines to be designed completely by the Directorate of Naval Design and built by the Shipbuilding Centre at Vishakhapatnam), Tejas and beyond, the story is positive albeit with many ‘ifs’ at the moment. Also, with what I saw in the effervescent spirits of the small and big Indian players at the DefExpo, I would like to believe (with a tongue-in-cheek reality) that the decade ahead is one that belongs to the ‘Indian Design’ – the soul of IDDM.

Actual Challenge Areas

To my mind, the actual challenges for IDDM lie in two areas, which are:

(a) The stipulation that the IC percentage has to be applied right through to include:

  • Basic cost of equipment.
  • Cost of Manufacturer’s Recommended List of Spares (MRLS).
  • Cost of Special Maintenance Tools (SMTs) and Special Test Equipment (STE).
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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Lt Gen VK Saxena

former Director General Army Air Defence. He is presently an Advisor to a leading Defence PSU.

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