DRDO wants private cos, Armed Forces to share cost

DRDO wants private cos, Armed Forces to share cost
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First Published: Fri, Feb 15 2008. 12 37 AM IST

More accountability: A file picture of the light combat aircraft Tejas. DRDO has been accused of delays in indigenous projects such as the Tejas and the main battle tank Arjun.
More accountability: A file picture of the light combat aircraft Tejas. DRDO has been accused of delays in indigenous projects such as the Tejas and the main battle tank Arjun.
Updated: Fri, Feb 15 2008. 12 37 AM IST
Bangalore: The Defence Research and Development Organization (DRDO) has asked the government to allow the Armed Forces and private firms to share the cost of developing missiles, tanks and aircraft, in an attempt to bring more accountability in India’s defence research projects.
DRDO would invest 70% of the project cost in such a venture while the private firm, which could end up as a preferred vendor to produce these weapons, will invest 10%.
The defence research agency has proposed that end users from the three forces—army, air force and navy—should give 20% of the development cost of a missile or a radar. This, it says, would ensure the user agency also owns the project in case of snags or delays.
More accountability: A file picture of the light combat aircraft Tejas. DRDO has been accused of delays in indigenous projects such as the Tejas and the main battle tank Arjun.
DRDO has been accused of delays in indigenous projects, such as the main battle tank Arjun and the Tejas light combat aircraft, besides shortcomings in product deliveries in some missiles that has forced the military to source weapons from foreign manufacturers. With a mandate from the government to go for joint ventures with foreign and Indian private firms for developing new products and focus on delivering them in defined time frames, it also is attempting to shed its image of an agency that is bureaucratic and slow.
“It ensures that the user also spends resources in the development,” said W. Selvamurthy, chief controller (R&D) of DRDO.
However, the move to involve the Armed Forces by asking them to invest 20% of the project cost has come in for criticism. “The military’s business is to fight the war. It (funding development programmes) will dilute its purpose,” said air chief marshal (retd) S. Krishnaswamy.
“Initially, the forces were not allowed in development projects, but now we are there,” he said, on the IAF’s involvement in the flight trials of the Tejas fighter. But, a member of a panel headed by adviser to the finance ministry Vijay Kelkar to review defence procurement in the country said funding by the military and risk sharing by the private sector were part of its recommendations in 2006.
“There would be no cost overruns. Everybody will be looking at each other (and monitoring) work,” said N.R. Mohanty, the panel’s member and chairman of the India unit of Textron Inc., the US maker of Bell helicopters.
The defence research agency has recommended that small units that build components and subsystems for various DRDO programmes would be allowed to form consortiums to bid for weapon development projects and it would invest 80% of the project cost.
“The ideal thing should be equal (financial) contribution by all players,” said Deba Ranjan Mohanty, senior fellow at the Observer Research Foundation, a think tank in New Delhi. “Even if it’s not, the user should be involved in the project from the concept stage. It has to work.”
Mohanty cited an example of “Future Infantry Soldier as a System,” a programme of DRDO with the army that aims to have a soldier equipped with modern armaments and also have sensors to monitor his health, as a collaborative effort in defence research.
DRDO also has adopted a strategy of involving the private sector through three models. The first is a technology transfer model, where it asks the private firm for a one-time fee and royalty for each piece sold, which it has put in for some years in a smaller scale for the food products it develops for the soldier.
The other two models are risk and revenue sharing—partially and fully. Under the partial risk sharing model, DRDO has transferred a drug it developed to relieve cancer patients of side effects during radiation for Rs5 crore to Dr Reddy’s Laboratories Ltd.
The Hyderabad-based pharma company will conduct phase three trials in multiple cities of the drug on its own and once it is completed, it would market the product. “They see potential for this drug overseas,” said Selvamurthy.
So far, private players have built smaller systems for the various missiles and tanks developed by DRDO. Now, the agency says that the industry is gaining maturity to build larger products such as aircraft and larger weapon systems for use by the military.
“Our brain (and) their hand should be the concept,” said Selvamurthy.
The defence equipment division of India’s largest engineering firm Larsen and Toubro Ltd, says it is already working on projects such as the Dhanush missile and Sarvatra bridges, adopting the model where it takes risks after the product is developed by the defence agency.
“Technology gains are enormous and we (now) build complete systems,” said M.V. Kotwal, the senior vice-president who heads the defence business at L&T.
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First Published: Fri, Feb 15 2008. 12 37 AM IST
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