For private-sector executives in India who normally get only snippets of information to design components of complex military hardware, climbing into tanks and talking to combat soldiers is an eye-opener.

Earlier this month, more than 200 representatives of defense companies -- big and small, local and foreign -- got unprecedented access to India’s secretive military. At two events in the western city of Ahmednagar, they crawled inside tanks, learned about the army’s equipment needs and spoke with troops on the front lines in Kashmir, a region also claimed by main rival Pakistan.

“You could feel how the soldier would adjust themselves in a tight space,” said Rajesh Khurana, an associate vice-president at Bharat Forge Ltd., a major Indian manufacturing defense firm, who noted that he personally climbed inside of a tank. "It was a pretty intimate affair."

The new-found transparency is part of Modi’s efforts to transform the world’s biggest arms importer into a defense manufacturing powerhouse as he spends $150 billion over the next decade to modernize the armed forces. Closer collaboration with the military would increase the technological capacity of local companies and create jobs as more than 10 million Indians join the work force each year.

Opening Up

“We’ve seen the army open up under this current leadership," said Jayant D. Patil, a senior vice-president with Larsen & Toubro Ltd., which makes parts for everything from missiles to submarines. “The army is trying to build a relationship with the private sector. They’re communicating what their real needs are and want us to know what kind of problems they see in their day to day life -- and then industry can build solutions."

For the past few decades, publicly owned defense companies have repeatedly failed to do just that.

Almost two-thirds of the army’s contracts for critical weapons and equipment concluded from 2007 to 2012 -- worth nearly $4.5 billion -- were delayed, India’s national auditor said in a report this week. The foot-dragging was so severe that it “hampered" the military’s modernization plan and impacted defense preparedness, the report said, blaming the delays in part on a “heavy dependence" on imported weapons.

Arms Imports

Nitin Wakankar, a defense ministry spokesman, had no comment on the auditor’s report. In response to questions, the army said the Ahmednagar events stemmed from Modi’s campaign for companies to “Make in India." The policy aimed to “harness the preparedness of the Indian private industry towards meeting the felt-needs of the armed forces" and “reduce dependence on foreign vendors," it said.

The government’s move to open itself up to private industry marks a “very, very significant departure” from the norm, said Anit Mukherjee, an assistant professor at Singapore’s S. Rajaratnam School of International Studies. “It will be a significant step toward fulfilling ‘Make in India.’”

India relies on imports for 60 percent of its defense requirements, much of which has come from Russia due to a previous Cold War alliance between Delhi and the Soviet Union. Of late, it has bought more weapons from the U.S., becoming one of the top markets for American defense companies.

The Ahmednagar events featured executives from Mahindra & Mahindra Ltd., Tata Group, Larsen & Toubro and Bharat Forge. Participation among foreign defense companies was limited to those with India offices, including Honeywell International Inc. and Dassault Aviation SA.

‘Blind Guess’

All attendees had to be Indian nationals, vetted and approved by the army. The invitations to small-and-medium-sized defense firms were a first in a sector that prizes scale and a country that tends to favor conglomerates.

Subimal Bhattacharjee, a security expert and former India country head for U.S.-based defense firm General Dynamics Corp., said the military went beyond merely talking about its equipment: Army officials, who wanted a new engine design, actually gave six Russian-made infantry combat vehicles to private companies.

“It definitely helps people to utilize their resources better,” said Bhattacharjee, who attended the event. “You don’t have to make a blind guess. You have a vehicle to yourself that you can play around with and understand better."

Defense Failures

India’s defense companies have a long track record of failing to deliver. A 40-year effort by the government to develop a battlefield tank has yet to produce anything the army can use. Similarly, a project to produce an anti-tank guided missile has seen repeated setbacks, forcing India to acquire them from Russia, France and Israel.

The army had previously refused to discuss procurement projects unless they received a formal request, Deepak Sinha, a retired army veteran who oversaw procurement for the Indian Special Forces, said in an e-mail. And even then the military never told defense contractors about “procurement philosophy or future plans," he said.

“The army has always preferred to keep interaction with business houses to the minimum," said Sinha, who served in the military for more than three decades. “This interaction with business executives would certainly be a first, and a very good omen at that."

Source:
courtesy of BLOOMBERG

by Iain Marlow And Nc Bipindra

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