Make in India in defence: Few JVs inked so far, but all lining up to take off
Conversations with those within the private aerospace and defence sector in India suggest that it is still early. While some joint ventures have been formed and work has started, manufacturing, especially on a large-scale, is some distance away.
Within months of assuming office as the Prime Minister of India, Narendra Modi launched his famous 'Make in India' initiative with an aim to make India a global manufacturing hub. Many global companies in the defence sector have since evinced interest but to little effect.
Recently, reacting to media reports about Airbus' plans to set up a manufacturing plant in Chennai, Pierre de Bausset, president and managing director of Airbus India, clarified that the company had not zeroed in on any location yet. He further said that all plans to someday manufacture in India were linked to Airbus getting a make-in-India project in defence. So, evidently, while there is interest from the global companies, how have we performed on translating these into actual manufacturing projects?
Conversations with those within the private aerospace and defence sector in India suggest that it is still early. While some joint ventures have been formed and work has started, manufacturing, especially on a large-scale, is some distance away. Some of those that Business Today spoke to felt results on the ground could start showing clearly in the next 12 to 18 months albeit it is still early and only little over half a dozen joint ventures have been announced in the defence space. What cannot be missed out is that three of them are in Hyderabad.
Some of the major joint ventures include:
1. Boeing and Tata Advanced Systems have a joint venture company, Tata Boeing Aerospace (TBAL). On March 1, 2018, it inaugurated its state-of-the-art facility in Hyderabad. Spread over 14,000-square meters and employing 350 people, it is being described as the sole global producer of fuselages for AH-64 Apache helicopter delivered by Boeing to its global customers including the U.S. Army. The facility will also produce secondary structures and vertical spar boxes of this multi-role combat helicopter. The delivery of the first fuselage is expected this year. In fact, a press release of the Tatas on this quotes Nirmala Sitharaman, minister of defence, as saying: "I congratulate Tata and Boeing for taking this bold step towards Make in India and making this substantial investment in the defence space." TBAL is Boeing's first equity joint venture in India.
2. In August last year, to make anti-tank guided missiles, Kalyani Rafael Advanced Systems (KRAS), a joint venture between Kalyani Strategic Systems Ltd. and Rafael Advanced Defense Systems Ltd. of Israel, inaugurated their state-of-the-art facility, also in Hyderabad.
3. Rafael Advanced Defense Systems also has a joint venture with Astra Microwave Products Limited in Hyderabad to make software-defined radios. This is again in Hyderabad.
4. In October 2017, Dassault Aviation and Anil D. Ambani's Reliance Group laid the foundation stone of the Dassault Reliance Aerospace Limited (DRAL) manufacturing facility in Mihan, Nagpur. Under the Joint Venture company, DRAL (51 percent Reliance Aerostructure and 49 percent Dassault Aviation) the facility will manufacture several components of the offset obligation connected to the purchase of 36 Rafale Fighters from France, signed between the two Governments in September 2016.
5. On February 23, 2018, Mahindra Aerospace Private Limited and Canada's Viking Air Ltd signed a Memorandum of Understanding (MoU) "to form a strategic alliance to support and take advantage of India's growing regional air connectivity opportunities." The MoU was signed during the state visit of Canadian Prime Minister, Mr Justin Trudeau, to India last month.