Despite announcements almost every month, not one big project has taken off. With just about a year left, Modi govt unlikely to have much to showcase in 2019.

It is time to call a spade a spade. For the defence sector, which was supposed to be a cornerstone of the initiative, the Make in India story is over. In fact, it ended even before it began — not a single major project took off despite the best of efforts, or claims, in the last three years.

The Narendra Modi government’s biggest initiative — to involve the private sector in mega defence projects as ‘strategic partners’ — has gone through so many rounds of expectations, amendments and interpretations that its very concept is now on shaky grounds.

It can safely be said that in this tenure, and given the pace at which things are moving, the NDA government is unlikely to sign off on any of the mega plans it had to award contracts to the private sector for manufacturing fighter jets, submarines and tanks.

The aim was to initiate the process of creating India’s very own Boeings and Lockheed Martins to compete in a global market. But as things stand, Indian companies that invested in the defence sector are on the verge of bankruptcy, with some even facing insolvency litigation.

The problem is that there is just not enough time left. For the strategic partnership plan – involving multibillion dollar Make in India projects – the meagre one year and change that this government has will leave things hanging midway, if they take off at all.

Selecting an Indian private company for a mega project is a long process. From inviting bidders to starting financial evaluations, assessing technical capabilities and then getting involved in lengthy conversations on pricing and delivery, the process is not only long, but is fraught with the many perils of working in the defence sector – rigging, lobbying and heartburn.

The fastest that India has perhaps selected a major military system in recent years was the emergency purchase of basic trainers for the Air Force. With the HPT-32 aircraft grounded due to safety issues, the IAF pressured the UPA government into an emergency purchase at breakneck speed in 2009. It still took three years from issuing tenders to signing.

For the strategic partnership plan – set to face teething troubles due to its unique, untested model – even tenders to start a selection are yet to be approved. It is a different story of course that the super-fast basic trainer deal – eventually won by Swiss company Pilatus in 2012 – is currently facing a CBI inquiry on allegations of undue favours by the Air Force in the selection process; an inquiry that has incidentally raised alarms in the bureaucracy as well as the Air Force top brass.

A careful bureaucracy is unlikely to push through projects without due process, well aware of recent scams and scandals such as the AgustaWestland VVIP helicopter case that put a former IAF chief behind bars. Therefore, a mega project taking off – resulting in the actual signing of a contract – is unlikely in the short timeframe left for the government in power.

The AON story

So, what is this buzz about the defence sector that makes it sound so exciting? Announcements about some major project or the other have been made almost every month in the past years, often in the thousands of crores, getting ‘cleared’.

A running joke in the industry is on the big ‘AON scam’. Mind you, this is no corruption scandal involving middlemen and commissions, but an optical illusion that shows that all is well. An AON or ‘Acceptance of Necessity’ is the very first stage of a military procurement.

Simply put, it means that the government agrees in principle that the particular service requires what it is asking for, say a new rifle or a fleet of submarines. It is also a go-ahead to start exploring the process for acquisition. Not all AONs result in tenders being issued, and most lapse several times as the service is unable to move ahead due to technical or financial issues.

Yet, most AONs granted and re-granted by the ministry are celebrated as mini events, heralding a new dawn for Make in India. In a recent answer in Parliament, when asked for achievements on Make in India, the defence ministry again came out with a list of AONs it has ‘accorded’ in the past three years.

The number seems impressive – 148 capital acquisition proposals have been cleared (granted AON) by the government in the past three years, of which 105 proposals worth approximately Rs 2.33 lakh crore have been categorised as Make in India.

The reply also states that the broad timeframe to execute and sign these is between one-and-a-half and two-and-a-half years. However, not a single one of these proposals under Make in India has managed to make it through to full approvals.

As far as private industry is concerned, defence is now a stagnant sector. Companies that took the plunge and hired big in anticipation for orders are now retrenching staff, many of them taken from public sector unit assignments. At least one shipyard is on the verge of getting shut down, while others are incurring unsustainable losses.

It is a sector not for the faint-hearted. And as things stand, the story is over for now and in the hands of the new government that will take power in 2019.

17 Comments Share Your Views

17 COMMENTS

  1. The first priority should be to get the brave Indian jawan a world class rifle, initially imported, with steadily increasingly local content. Had Manohar Parrikar, a matallurgist from IIT Powai, achieved this modest milestone, there would have been something to remember him by.

  2. This Ministry is caught in procedural traps and time wraps. The old licensing system has come back through the back door.Unless the Services are given total independent authority and responsibility to procure what they need,this “midsummer’s night dream” will continue.

  3. How do you expect big ticket production houses to start manufacturing here within a period of 3 years or so.. More so when rest of the agencies are acting as a crab, always pulling down, something which a retarder parachute is designed for.. Amazing to see people, when they expect Lockheed to start manufacturing within months of their showing intents.. The bureaucracy is so god damn steeped in their own safe world, you can only feel frustrated.. Hence the pace has to be slow.. Give them sometime.. We need not be in a tearing hurry.. They have no choice but to deliver.. They will..

  4. The trio of IAS ,Armed Forces officers and Politicos coupled with cronies can never let go . Our enemies use them well too . Only a brutal drubbing in a real War with our terrible equipment and poor training shown up, may ,and I repeat may result in something better . Only a terrible defeat like 1962 . Till then dream on .

  5. This is INDIA where we merry when some good initiative does not take off. Look at the intentions. It states WE can. It’s for us..Let’s find the gaps and try to fill it. We politicise everything. Such initiatives have to be kept out of political ring and taken up as citizen zest.

  6. Man Mohan or Modi… All political leaders are same. They are influenced by brucracy who are actual Govt in power. Imagine even the AON is cleared by Civil servants who have no exposure to defence deployment except a visit to defence establishments for a few days during their training. What wonders can U expect from a new government.

  7. The articled failed to mention the Rafale fighter jets and Dassault commercial jets being manufactured in collaboration with Reliance Defense. They also failed to mention the recent order of Tejas and LCH by the Indian air force from HAL. Speaking of HAL they are also making Kamov choppers which will eventually be exported from India. This article is biased. BJP will not just come to power in 2019 they will be in power for the next 70 years. Har Har Modi Ghar Ghar Modi.

    • Forgive this ignorant bhakt….rafale deal is as good as dead for the IAF with the original make in India clause done away with Modi bravado failing to give HAL a license to manufacturer this beauty here. We were to have 3sqaudrons now with less than 40 pieces he can go to town shouting but Indians are fools to believe him at least for now

    • Mr Bhakat Bharat,
      1)The original well thought Rafale deal was sabotaged to project Nammo as the quintessential savior conjuring unheard solutions in between boiling water and adding tea leaves.
      2)LCA project is 25 years old everything to do with the political crass NDA and UPA are. It’s a good advanced airframe with the latest fly by wire systems and a terribly underpowered engine still under development not able to satisfy defense specs.
      3) This PR Santa will bankrupt India with his hare brained schemes like Demontization with a badly implemented GST.
      4)This PM on permanent campaign mode with a solution for all bhakats 1)by instigating the minority by placating and playing for the gallery.2)Useless slogans and acronyms. 3)Low life comments not fit for a PMs in power.
      5)Total manipulation of the state apparatus 1)finance 2)media 3)EC 4)judiciary 5) people
      Hence its the worst government we can get.. Hence it subscribes to the adage by the people for the people. We deserve such leaders because of people like you Sadly.

  8. Reliance communication with reliance Jio has failed telecom sector under the umbrella of bjp govt but still govt revived reliance via reliance defense deal… modi govt only working for corporate with polarised vote bank which is actually making India economically weaker

  9. When cabinet ministers including the Prime minister are rolling for election campaigns all over the country to keep intact their power, all indians have to but wait for miracles to happen in changing their lives. Centre & state elections should be held on one go so as to save months of time for public as well the govt thus ensuring more productivity

  10. It is sad that things have not moved at the desired pace. Although intensiond being good: Govt & beauracracy has to do much more in enabling process .
    South block & north block should just be a supervisor : the whole process of procurement should move out to a separate enabled team of professionals / stake holders to ensure time bound decisions & supplies. Such a team can have few EMINENT personnel to guide in case of any doubt.

  11. Why to worry, they will showcase cow vigilantes, they will showcase religious hatred and intolerance that has been successfully proliferated, they will bring in Ram Mandir again. Political class has lost all credibility.

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