Baba Kalyani, CMD, Kalyani Group
“Success of Make in India in Defence would depend on making available test facilities for trial and validation of home grown products and technologies”.
India’s defence procurement process is passing through interesting times. As the procedures evolve and Indian defence industry gears up to pick up the challenge of ‘Make in India’, processes and procedures are being re-examined to remove bureaucratic hurdles and make the system more responsive and efficient. At this crucial juncture we decided to seek views of one of the Captains of the Indian Defence Industry, Baba Kalyani, Chairman, Bharat Forge. Having made their mark in the field of engineering steel,renewable energy and auto components as a global leader, Kalyani has big plans for the defence sector and has partnered with Sweden’s Saab, Israel’s Rafael and Elbit Systems to make a range of products, including missiles and guns. In February 2016, Bharat Forge teamed up with Tata Motors to bid for Future Infantry Combat Vehicle for the Indian army. Excerpts from the interview with Padma Bhushan Baba Kalyani:
Defstrat. There have been great expectations in Industry circles on defining measures to simplify Defence Procurement Procedures and to give a boost to indigenous production of defence stores. How far in your view has the newly released DPP met these expectations?
Baba Kalyani. The newly released DPP is a welcome step. The MoD has shown its willingness to adopt relevant suggestions proposed by the industry. Introducing new categories like IDDM and more focus on ‘Make programs’ are the right steps in encouraging indigenisation and self-reliance. It is also good to know that the government has paid attention to the requirement of enhancing the role of MSMEs in defence sector. This DPP also stresses on increasing accountability and cutting down the time frames for procurement activities, which was very important. The government has also taken some bold steps specially related to single vendor situation and refund of R&D expenditure if orders not placed. Overall this is a great policy initiative.
Defstrat. In earlier interviews to media, you have been emphatic on the need for realism in the drawing up of GSQRs. Do you feel assuaged by the provisions in the DPP-16?
Baba Kalyani. GSQRs should always maintain the fine balance between the expectations of the user and capabilities of the provider. You cannot have unrealistic expectations, which no system can cater for. The categorisation of essential and desirable parameters is a welcome move from the sacrosanct and rigid treatment of GSQRs earlier. Also, credit for Enhanced Performance Parameters gives more levy to technical superiority than L1-approach.
Defstrat. While Artillery Guns and even Berretta pistols relate to the core acumen of BFL Group in metallurgy, forays by KSSL into Aerospace, Missiles indicate a deliberate strategic shift to broaden BFL’s horizon of interests or is it seeking the early bird advantage to avail emerging opportunities?
Baba Kalyani. Kalyani group has always been a technology driven company, diversifying itself into new areas based on innovation and indigenisation. Our foray into segments like aerospace and missiles are an extension of this philosophy and our core competence. The aim is to leverage our knowledge and skills, bring in the best technologies to the country and develop smart products, thereby building, broadening and deepening our reach.
Defstrat. Private sector participation in Defence manufacture as presently charted is an augmentation of existing public sector capacities. There is a view that a direct collaborative private sector participation with an existing Ordnance Factory or a DPSU would have been a good model. Do you think that’s a workable option? (Historically, the Kalyanis had commenced their journey of success as Managing Partners).
Baba Kalyani. PPP models have the potential to drive and materialise the defence industrial base in India. They can help improve efficiency and cost effectiveness, avoid duplication of resources and infrastructure, and reduce risks for all concerned. NPCIL and ISRO are perfect examples of successful PPP models in our country. However, public sector in defence is mostly driven by OFBs and DPSUs which are often reluctant to join hands because of lack of autonomy to undertake such collaborative actions. We need to give them requisite autonomy and authority to choose partners and work on such projects.
Defstrat. Contrary to expectations, details of the Services’ LTIPP are not being shared along with the DPP-16. Corporate decisions bank on finite numbers. Do you consider a degree of transparency would have assisted effective corporate decision making?
Baba Kalyani. Of course, it would have been great if Services LTIPP was shared along with DPP-2016 especially companies like my group which follow a product driven strategy and believe in developing a product to demonstrate our capability. And it is not just about bringing transparency. Presently, there is no mechanism/channel available with the services to inform the domestic industry about its requirement in advance which will enable the industry to prepare detailed financial, technological and industrial plans to meet the requirements in a time frame that is acceptable to the armed forces. And, when the acquisition process begins, it is often too late for the industry to offer suitable, indigenous solutions. Sharing of LTIPP would have been a right step in closing this gap.
Defstrat. KSSL’s Artillery Guns would qualify for being placed in the highest ‘Buy Indian (IDDM)’ category. For other platforms and products however, the field is more competitive. Could you indicate some of ‘winnability’ attributes you keep uppermost while selecting a product and its OEM.
Baba Kalyani. There are many factors, including corporate, strategy and financial factors. But the key points are that the product should come good in the eyes of the customer, it should be cheaper than imports, and key technology should rest in the country. The newly formed IDDM category will lead to creation of a vibrant defence industrial base.
Defstrat. ‘Strategic Partnerships’ were to be the cardinal game changer in the DPP-16. With the Chapter on ‘Strategic Partnerships’ not finalised, the uploaded DPP-16 is at present, inchoate. Do you agree? Does Industry still have a window to convey concerns and suggestions for evolving an effective and equitable ‘Strategic Partnership’ model?
Baba Kalyani. We have to wait to see all the missing information of DPP 2016 to analyse it in it’s compete totality. The industry has been expressing its concerns and suggestions from time to time and the government seems to have taken those into account in DPP 2016. We are hopeful that the upcoming chapter on ‘Strategic partnerships’ will accord priority to the requirements of the country and domestic industry.
Defstrat. There is a view that some of the initial enthusiasm amongst foreign OEMs to the ‘Make in India’ initiative has somewhat plateaued. Do you sense any loss of traction amongst foreign OEMs and like to suggest policy or procedural course corrections to keep the spark in this Initiative?
Baba Kalyani. ‘Make in India’ is a revolutionary idea which has the capability to change the face of defence production in India. However, we have to understand that these things take time. We are in the transition phase- trying to move from being an import driven market to a self-reliant one, and that’s not an easy task. The government has taken slew of measures, including easing of licensing regime, increase in FDI policy with automatic route up to 49%, according a level playing field to private companies vis-à-vis the DPSUs for commercial comparison, etc which are indeed laudable. The DPP 2016 has also made an effort towards cutting down the time frames for procurement activities which should ease these concerns. The need of the hour for the Government is to continue with this momentum and introduce many more such encouraging steps which will give the right vibe to the OEMs. The government also needs to announce some big-ticket programs for private industry for keeping alive the traction and avoid the feeling of procurement paralysis.
India’s vast skilled and trained human resource has been an important plank underlying the ‘Make in India’ sales pitch. As a perfectionist you well know that several skills required in high-tech production chains are specific to niche technologies. Your suggestions on playing the ‘skill advantage’ card with realism.
Skill development initiatives are being undertaken by the Government of India. However, it is important to see and note that we don’t create qualified but unemployable skill sets. I think the better way is that a joint training establishment is operated between Indian companies and foreign OEMs, developing much focussed skill set as required.
Defstrat. KSSL has recently entered into MOUs with foreign OEMs for co-development / co-production of various defence equipment and platforms. Given that on fructification, each of these would bloom into a manufacturing entity with its own management template, KSSL would need to adapt and work synchronously on varying management models. Do you see that as a concern or an opportunity?
Baba Kalyani. This is of no concern to us. Kalyani group is a multi-national conglomerate with operations across the globe. Do you know that all our international companies are run by independent local management with no interference from the Indian HQs. As a matter of fact, there are no Indian employees in the management of those companies. Kalyani Group has also been running long standing successful Joint Ventures with many foreign companies and most of these collaborations are market leaders in their segments.
Defstrat. Lastly, an aspect that has created heightened public interest is the prospect of a tie-up for manufacturing Humvees in India. There are of course concerns expressed on the Humvee as a ‘fuel guzzler’. Is that a deal that KSSL is eagerly looking forward to?
Baba Kalyani. The Humvee has been the vehicular backbone of U.S. forces around the world. It is also used by numerous other countries and organizations and even in civilian adaptations. Kalyani group is excited to introduce this most successful military vehicle in India. We will indigenously design, develop & manufacture new variants of protected & specialised vehicles for our security forces, based on the modular Humvee Platform.