While indigenous industry must be given preference over imports, local products should be competitively priced because the defence budget cannot be made to sustain and bankroll an inefficient local production regime. Unless an indigenous product is priced attractively with a developed eco-system, mission ‘Make in India’ will remain a pipe dream, argues MRINAL SUMAN
In a recent response to a request for 83 Tejas Mark1A fighter jets from the Ministry of Defence (MoD), Hindustan Aeronautics Limited (HAL) has reportedly demanded ₹463 crore per jet. The unexpectedly hefty price tag has sent shock waves of incredulity through the corridors of MoD and the Air Headquarters. But for the knowledgeable, the exorbitant price tag is no surprise.
All public sector enterprises are notorious for ridiculously overpriced and terribly uncompetitive products. HAL is no exception. It sells indigenously assembled Sukhoi fighter to MoD for ₹415 crore while the imported ones cost ₹330 crore apiece. It means that for every hundred Sukhoi fighters procured from HAL (₹41,500 crore), the Air Force can get 126 imported fighters. When the requirement runs into hundreds of fighters, enormity of the cost penalty suffered by the defence budget can be well appreciated. Apparently, competitiveness means little to HAL.
With 41 ordnance factories, five undertakings and four shipyards, the public sector enjoys total monopoly over India’s defence industry. The products manufactured include arms, armoured vehicles, heavy vehicles, fighter aircraft, helicopters, warships, submarines, missiles, ammunition, electronic equipment, earth moving equipment, special alloys and special purpose steels. The private sector has been a peripheral player so far; its role is limited to the manufacture of sub-assemblies and components.
This story is from the August 2018 edition of Geopolitics.
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This story is from the August 2018 edition of Geopolitics.
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