Defence Purchase Offsets:Biggest Boosters Of 'Make in India'

Defence Purchase ‘Offsets’: Biggest Boosters Of  ‘Make In India’

With the signing of the Dassault Aviation and Reliance Aerospace joint venture, the indigenous defence offsets’ industry, has suddenly come of age.

It will, in turn, spawn a private aerospace/naval/land- weaponry manufacturing ecosphere, involving hundreds of quality vendors; in which TATA, Mahindra, L&T, Wipro, Adani, Infosys, TCS, this, and the other Reliance, all expect to feature prominently.  

But this one offsets’ deal alone ramps up the business profile from Euro 100 million, to Euro 4 billion, but now, in the private sector.

It is on the back of the first purchase of 36 Rafale 4.5 generation fighters from France in fly-away condition. The purchase, 10 years in the mulling, was signed with an embedded 50% offsets’ clause.

Dassault has also indicated its willingness to manufacture 100%, in India, if there are more orders. This, over and above India’s option to buy an additional 18, on the same terms.

This first tranche of the offsets’ translates to a pro-rata Euro 600 million programme annually, spread over 7 years.

Dassault-Reliance Aerospace however expects to be part of the Dassault Aviation consortium’s global supply chain, after this first agreement expires.

Partners in the manufacture of Rafale jets, include French companies Safran, Thales, MBDA, and of course, Dassault itself.

 The Reliance Aerospace JV  is setting up an integrated facility in a 289 acre location in Central India, at Nagpur. This facility will be part of Nagpur’s multi-nodal international cargo hub and airport (MIHAN).

The JV, in a walk-before-you-can-run process, will start manufacture within 12 months, of components for aero structures, electronics parts, and engine components.

Part of the reason the earlier UPA era 126 fighter multi-role fighter tender worth over $20 billion had to be scrapped, was because Dassault did not think the government owned  HAL, was up to the task of comprehensive local manufacture of the advanced aircraft.

Rafale was, after all, created to replace all other fighters in the French Air Force. It is also on order from Egypt and Qatar, and under active consideration by at least a dozen other countries.

It is not only a 4.5 generation multi-role fighter, but has many state-of-the-art features. Enhanced use of carbon fibre composites promotes its stealth capacity. It’s fly-by-wire, with superb avionics and speed. It carries the advanced AESA radar.   

The Rafale is comparable to the mighty American F-35.

The missiles it carries, will enable the Indian Air Force to hit targets in both Pakistan and China, without leaving Indian airspace.

The beyond visual range (BVR) Meteor Mach 4 air-to-air missiles, capable, if necessary, of nuclear deterrence, have a range of 150 km. And the Scalp Mach 4 cruise missile, air-to-ground, has a range of 300 Km..

This first integrated JV will also undertake R&D under the Indian government’s indigenously designed developed and manufactured (IDDM) programme. It plans to graduate towards designing of aircraft, improving efficiency, manoeuvrability and range.

The  JV also expects to provide stealth, radar, and thrust vectoring know-how for missiles, to India’s DRDO.

 It has offered to develop a new ‘Kaveri’ engine with 90kN thrust, to succeed the failed 72kN developed locally, for the Tejas.

This deal is the start of an avalanche of defence purchases and manufacturing coming up, with massive ‘Make in India’ opportunities and highly skilled jobs resulting.

There are howitzers, helicopters, field-guns, submarines, high-powered rifles, light but strong helmets, bullet-proof vests, night vision equipment,  armed-drones, surveillance equipment, sensors, stealth frigates/ other ships, aircraft-carriers, ammunition, missiles, missile-shields etc. on the  $150 billion plus shopping list.

Moving fast in the space, Anil Ambani has also acquired the Pipapav Naval Shipyard, in 2015, and just signed on for another JV with Rafael Advanced Defence Systems, of Israel, to manufacture Python, Derby, Spyder and Barak air-to-air missiles.

Other promising ventures include TATA Boeing Aerospace manufacturing Apache AH-64 helicopter fuselages.TATA  Advanced Materials makes composite panels for power and mission equipment cabinets. It makes auxiliary power unit door fairings for the P-81 long-range maritime surveillance/anti-submarine warfare aircraft.

 Another TATA company, manufactures complex floor beams from composites for the latest range of Boeing 787-9, and provides ground support equipment for the C-17 Globemaster.

Elsewhere, Airbus Helicopters intends, with Mahindra Defence to manufacture military helicopters, starting, again, with helicopter parts.

In the public sector, the DRDO/Russian BrahMos JV, and the DRDO-Israel JV for Barak 8 surface-to-air (SAM) missiles, of course, have been  resounding successes.

Private sector joint venturing, starting with componentry, is evidently the designated and viable way forward for this multi-billion dollar business, just beginning to wash up on Indian shores.

 For: ABP Live

(748 words)

October 7^th, 2016

Gautam Mukherjee