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Defence and Aerospace: The Indo-French bond

Source: Livemint

 

Apr 13 2018. 06 42 AM IST

 

Marking the 20th anniversary of the strategic partnership between India and France, Prime Minister Narendra Modi and French President Emmanuel Macron had a summit meeting in New Delhi in March 2018. Fourteen agreements were signed, including those related to strategic maritime awareness, logistical support between armed forces, and exchange of classified information.

 

Following up, an industrial delegation of 80-plus members of GIFAS, the French aerospace industries association, will be visiting India from 16-19 April. Besides prime contractors, the delegation has both system suppliers and small specialist companies representing both commercial and military segments to include aircraft, helicopters, unmanned aerial vehicles (UAVs), engines, missiles, spacecraft and launch vehicles. Hosted by the Society of Indian Defence Manufacturers, the delegates from India and France will be addressed in New Delhi by defence minister Nirmala Sitharaman, minister of state for defence Subhash R. Bhamre and minister of state for civil aviation Jayant Sinha. There will be roundtables of policymakers and industry on specific themes: defence, civil aviation and space. This will set the stage for industry visits to Bengaluru, Hyderabad and Mumbai.

 

France is a major source of foreign direct investment (FDI) in India, with about 750 big French companies, with a cumulative investment of $5.82 billion between April 2000 and June 2017. Over 150 Indian companies are operating in France, employing around 7,000 people.

 

Modi articulated his strategic vision unequivocally during the visit of the French President: “Whether it is environment, or maritime security, or marine resources, or the freedom of navigation and overflight, we are committed to strengthening our cooperation in all these areas.” The joint statement acknowledged that “the Make-in-India initiative offers a valuable opportunity for Indian and French defence enterprises to enter into arrangements for co-development and co-production of defence equipment in India, including through transfer of know-how and technologies to the mutual benefit of all parties”.

 

The draft defence production policy, 2018, under consideration now, envisions India as one of the world’s top five defence producers by 2025, with self-reliance in 13 areas covering almost the entire range of weapons and systems. The export target has been fixed at Rs35,000 crore ($5 billion) by 2025. The FDI limit is proposed to be raised to 74% under the automatic route for “niche technologies”.

 

The intent to go deeper than just a buyer-seller relationship is distinctly manifest in both, the India-France joint statement of March 2018 and the draft defence production policy, 2018. The multi-tier industry delegation from France and the wide range of Indian participants also reflect the drive for Make in India. In order to achieve the targets, it is important for the armed forces to define requirements, both in terms of numbers and technology, well in advance, with a fair degree of certainty. The defence industry requires long gestation periods for design and development. This investment offers good returns in the long run as the life cycle of major equipment is long, with recurring sustenance requirements.

 

India faces complex security challenges as it has hostile nuclear armed neighbours to its north and west, with unresolved borders. The international community expects India to be a net security provider in the Indian Ocean region. Such security responsibilities require best-of-class armed forces. In its quest for the best, and for self-reliance, in defence and aerospace, India’s greatest challenge is to bridge the technology gap.

 

Strong factors favouring India are its colossal requirements, strength of micro, small and medium enterprises (MSMEs), and a large young population with good basic skills. According to the Stockholm International Peace Research Institute (2017), India has continued to be the largest arms importer in the last five years, with an import dependency running in excess of 60%—a clearly unacceptable situation. Even the civil aviation sector, which is import intensive, is expected to grow by 20%, with a requirement of over 1,000 aircraft. There are over 6,000 MSMEs in the defence sector, with many more capable of contributing to defence and aerospace in case they find the right opportunity.

 

The opportunities are phenomenal for any country willing to partner India, and for all stakeholders. In order to optimize the opportunity to mutual advantage, we have to transition from “Buy (Global)” or “Buy & Make” to “Make in India”. This requires engagements to commence upstream in the process of design and development. Innovation partnership at the academia-industry level between countries is an imperative. MSMEs from India are capable, and deserve their place in global supply chains. The larger industries have to lead the change in collaboration with international partners where required. The aerospace policy and industry need to view the aviation sector, both military and civil, holistically. The policy for UAVs needs to be put in place at the earliest to ensure that the vast resources committed to this industry get a direction. The recently announced defence industrial corridors, and the MSME clusters therein, need to embrace the aviation sector. And most importantly, the energy of the public and private sector has to be harnessed together to be able to achieve self-reliance by 2025.