The plan by the Ministry of Defence to put an embargo on the import of 101 defence items is expected to be progressively implemented between 2020 and 2024. Vipin Sondhi, managing director, Ashok Leyland, one of the largest providers of logistic vehicles to the Indian armed forces, spoke to T E Narasimhan on the benefits of the move, saying it will give confidence to the industry to participate in IDDM (Indigenously design, develop and manufacture).
How will the decision help the Indian industry?
This is certainly a welcome step and will give confidence to the industry to participate in IDDM (Indigenously design, develop and manufacture). The Indian public and private industry will focus on building further capabilities to strengthen the offerings to the defence sector. This sector will drive growth and be a major contributor to the economy.
How many of the 101 items are already restricted and what will be the incremental game for the industry?
There are over 50 items which are already part of the restriction as per DPP 2018. Now more items have been added. The advantage is that newly added items are complete equipment that form a huge part of the defence budget, and (a ban on their import) will be a booster for local industry.
How will it accelerate the Atmanirbhar Bharat narrative and bolster the Indian defence equipment manufacturing industry, especially the logistics sector?
With this announcement from the Government, there will be a number of indigenised developments which will bolster the defence logistics industry. Now with clarity on the restricted items, the industry will work on strengthening its product offerings. This will also give an opportunity to suppliers to participate with OEMs in the development and growth of the sector.
What are the key challenges to make the programme successful?
The main challenge today is a long lead approval process for any product and multiple points of contact. This process needs to be addressed. Some suggestions would be: streamlining procurement procedures to reduce complexities--one nodal point can be created for all approvals; rationalising numerous stages of Procurement Process; Trial and evaluations to be time bound as this will reduce expenses in-built in the contract price; focus/incentives for creating domestic DDM (design, development, manufacture) capabilities). On new platform procurements, the concept of “life cycle cost” can be introduced and domestic industry could be involved in spares/ maintenance activities. A 5-year procurement plan should be clearly defined.
Is sourcing technology a challenge? Despite relaxation of FDI norms we have not seen any major movement...
I think out of the declared list, a majority of the items are products we are capable of making in India, and there is no technological challenge. Indian industry does have the capability to develop the other products in the list, though some of the newly added items will take time to mature.
How does Ashok Leyland plan to capitalise on it? How many items that you also offer are being imported, which can now be supplied by completely by your company?
We have all the mobility platforms -- 4X4,6X6, 8X8, 10X10 and 12X12. We already have many of these platforms in service with the Ministry of Defence. We can capitalise on existing platforms as well as on our new developments in bullet-proof vehicles and Light strategic vehicles. We have also ventured into many tracked vehicle part development programmes which will help Ashok Leyland to grow.
How has Ashok Leyland fared in the big defence business and where do you see it in the next 2-3 years?
The defence vertical is a very important part of our business portfolio and it is a matter of pride for Ashok Leyland to be serving the nation for over five decades. It will continue to be a very important and integral part of our Portfolio and is a high growth area for us.
Will it boost exports from India?
India already has competitive products (in terms of quality and cost) which can be offered to export markets. As and when we develop products in other tactical and logistics platforms, we should see a further boost in exports.
How should the government support MSMEs to make the self-reliant vision successful?
The government has already announced a lot of changes in the definition of MSMEs and investment limits, eliminating the distinction between manufacturing and services. It has also disallowed foreign participation in tenders up to Rs 200 crore, which creates a huge opportunity for MSME to grow. Effective implementation of these reforms is the key.
What is your overall outlook on the defence space?
We see the defence industry as one of the leading sectors, which will significantly contribute to the growth of the Indian economy, but more importantly, bring atmanirbharta to national security.