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Problem With Strategic Partnership Model

The document discusses the complexities and potential issues surrounding the selection of single strategic partners (SP) for various defense segments in India, highlighting concerns over cronyism and the lack of experience among Indian companies in arms manufacturing. It points out the high costs of developing a domestic defense ecosystem and the challenges of land procurement for manufacturing facilities. Additionally, it notes that while domestic production could lead to exports, the logistics sector poses significant hurdles for such initiatives.

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KSHITIJ KUMAR
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5 views1 page

Problem With Strategic Partnership Model

The document discusses the complexities and potential issues surrounding the selection of single strategic partners (SP) for various defense segments in India, highlighting concerns over cronyism and the lack of experience among Indian companies in arms manufacturing. It points out the high costs of developing a domestic defense ecosystem and the challenges of land procurement for manufacturing facilities. Additionally, it notes that while domestic production could lead to exports, the logistics sector poses significant hurdles for such initiatives.

Uploaded by

KSHITIJ KUMAR
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

It is also not clear whether global arms manufacturers can have more than one Indian SP

and whether pre-existing tie-ups alone would be considered


If government is responsible for selecting the SP, then low-credibility claims cannot be
made, such as that Dassault, which had almost completed tie-up with Hindustan Aeronautics
Ltd (HAL) for manufacture of the Rafale in India, had on its own selected the completely
unknown Reliance Aerostructure (of Anil Ambani’s group) for the compulsory offsets!

Four segments: Fighter Aircraft, Helicopters, Submarines, and Armoured Fighting


Vehicles (AFV)/Main Battle Tanks (MBT).
In the interests of developing Indian companies with expertise and scale in each of the
sectors, the government will identify only one SP per sector, if only one Indian SP is
identified for each segment, this opens up the possibility of, for instance, Reliance
Aerostructure emerging as a private sector monopoly in the fighter aircraft segment.
Clearly, there is plenty of scope for ambiguity, subjective decision-making and cronyism
here! Given the fact that almost all Indian companies have virtually no prior experience in
armaments manufacturing,

the initial cost involved in developing such defence ecosystem is very high.
As per a report, if India manufactures Kamov helicopters domestically, it
would cost India nearly 2.5 times what it pays to Russia for the same.
Second, it is for sure that once the manufacturing unit will be set up, it would
not only focus on domestic requirement but also try for export the products.
But Indian logistics sector is still one of the major challenges for country’s
export oriented programmes.
Third, setting up a manufacturing industry requires large tracts of contiguous
land. Since land is a state subject in our country, its procurement would be
time consuming process.

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