Defence PSUs sound alarm over lack of orders & under-utilisation of production facilities
The government may tout its “Make in India” policy in defence production, while also setting an ambitious arms export target of $5 billion in the next five years, but defence public sector undertakings and shipyards have sounded the alarm over the lack of confirmed orders and under-utilization of their production capacities.
At least six of the nine entities (five DPSUs and four shipyards) under the defence ministry, which are often justifiably criticised for huge cost and time slippages as well as shoddy production quality, have warned that the bulk of their production facilities and manpower are set to become idle over the next couple of years if they do not get firm orders soon.
The armed forces, of course, have themselves been hit by woefully-inadequate modernization funds, leaving huge operational gaps on several fronts ranging from submarines, artillery guns and minesweepers to fighter jets, light utility helicopters and night-fighting capabilities.
Leading the pack is Hindustan Aeronautics Ltd, which makes several types of aircraft from Russian-origin Sukhoi-30MKI fighters under licence to the indigenous Tejas jets and Dhruv advanced light helicopters. Despite an existing order book of Rs 59,832 crore, HAL says it has no new orders beyond 2021-22.
The MoD says orders for 83 Tejas Mark-1A jets (for about Rs 39,000 crore), 12 Sukhoi-30MKIs and 15 light combat helicopters are in the pipeline for HAL. But HAL has told the parliamentary standing committee on defence that its “established production capacities will not be fully loaded even with these orders”. All this will adversely impact the country’s defence manufacturing ecosystem and its private sector partners, including MSMEs.
Similarly, Bharat Dynamics Ltd, with no order executable beyond 2020-21, wants the proposed orders for Akash surface-to-air missiles, Astra air-to-air missiles, and Milan-2T, Konkurs-M and Nag anti-tank guided missiles to be expedited. The two new Akash regiments for Army, for instance, will alone cost Rs 9,133 crore.
Mazagon Docks, in turn, says its extensive submarine-building infrastructure will become idle after it delivers the remaining four of the six French-origin Scorpene submarines (over Rs 23,000 crore) by 2022. MDL, in fact, contends it can immediately undertake construction of four major warships and seven more submarines.
The submarine refit facilities at Hindustan Shipyard Ltd (HSL) are already idle after it upgraded the Russian-origin INS Sindhuvir, which India plans to hand over to Myanmar, in January. “HSL wants the refit and upgrade of all Russian-origin warships and submarines but the Navy is sending Kilo-class submarines to Russia,” said an official.
Goa Shipyard, on its part, has been hit by the huge delay in finalization of the project to build 12 Mine Counter-Measure Vessels (MCMVs), which was first proposed way back in 2005, at a cost of around Rs 32,000 crore.
The Navy has now cut its requirement to eight MCMVs, while MoD has also put on hold the proposed construction of five fleet support ships for Rs 9,000 crore at GSL, with the help of Anadolu Shipyard (Istanbul), after bilateral diplomatic problems with Turkey.
The GRSE shipyard, too, is constructing 15 warships when it can 20. The only defence entities on a slightly better footing are BEL, BEML and MIDHANI. “Continuity in orders is essential to sustain production growth of DPSUs…Orders in pipeline need to be expedited for optimum use of their construction, building capacities and manpower,” said the parliamentary committee.