As India makes strides in indigenisation of defence equipment manufacture, a number of Indian companies are making significant investments in the sector. Kalyani Group is among the top companies which has taken a slew of initiatives in the defence sector. Giving details of the forays in the sector is Amit B. Kalyani, Executive Director of Kalyani Group, in an interview with SP’s M.A.I.

SP’s M.A.I. (SP’s): Do you think indigenisation should be the mantra to take the defence production in the country forward? What initiatives has Kalyani Group taken in this regard?

Amit Kalyani (Kalyani): Indigenisation and innovation is the only way that our country can be self-reliant in supporting the armed forces. Kalyani Group has taken a number of steps in the defence sector towards this end. We have been always supporting the defence forces by meeting emergent requirements of ammunition shells for all artillery equipment, road wheels and tracks for armoured fighting vehicles and also developing rockets, rocket motor tubes wherever asked for.

However, we have in the past three years invested considerably in defence R&D through which we have been able to produce a totally indigenously designed and developed 155/52-calibre Howitzer gun. We have also developed a light weight field gun both of which were on display at Defexpo 2014. Further we have developed indigenous unmanned ground vehicle and forayed in to electronics products that can be used by the defence forces. In addition, through collaborations, teaming and joint ventures we are in the field for manufacturing mine protected vehicles soft kill systems and the like. We believe in the adage of ‘partnering technology and driving innovation’.

SP’s: Could you give an update on your defence R&D activity?

Kalyani: Investment in R&D and scale is not directly linked. We are passionate about defence and that is what is driving our development effort. We are definitely investing in R&D in certain focus areas. Our R&D is product based.

SP’s: Kalyani Group is making its presence felt in the defence sector. Is it due to slowdown in other sectors that you are in?

Kalyani: For a moment let us forget about any sector and take a look at our demography. India is a country of young people and by 2022 the average age of the nation would be 29 years. We need to engage this young population in useful nation-building activity. Manufacturing offers a perfect avenue for channelising their energies. We need to give impetus to manufacturing. Defence and aerospace are two sectors offering great opportunity. The question is whether we as a nation will take advantage of this opportunity. Our drive is initiated by this need and we strongly believe that manufacturing in this country needs encouragement and defence and eerospace can help fill this gap.

SP’s: The group’s business model is heavily dependent on exports. Does this help the company in the present situation where domestic market is going through a sluggish phase or does it expose it to the problems being faced in markets in Europe?

Kalyani: Our business model is focused on both exports and domestic market. We have a de-risked model that has withstood many ups and downs in the last few years.

SP’s: The group has joint venture with an Israeli company for gun production. Could you give us a low-down on the same, particularly on the interest in the product by the Indian Army?

Kalyani: The joint venture is a strategic partnership with Elbit Systems in the high technology area of the artillery systems. We are partnering together in a number of programmes. We will be manufacturing these systems in India with our JV partner. The JV is aligned with the government regulations and is first such JV in this segment. We believe that we will be able to get state- of-the-art technology to India with this JV. Indian users trials are most challenging and among the toughest in the world. We are confident of fully meeting the user’s operational requirements in all respects. It would be premature to comment on the outcome of the tender but we are hopeful the best will come through.

SP’s: Any other joint venture or partnership in the pipeline?

Kalyani: We have also acquired a domestic electronics company and are in the process for acquiring some others both in India and abroad. We believe in both organic and inorganic growth. Our group is successfully running many JVs for last three decades and we are always open to tying up with good and reputed companies in India and overseas. Some agreements are in advanced state of discussions but it would be improper to mention them at this stage.

SP’s: What is your view on the current cap on foreign direct investment (FDI) in defence?

Kalyani: The current cap on FDI in defence is being debated at all levels. I do not want to add to the confusion. We are aligned with the current policy and believe that policy must keep the national interest in mind. Like I said earlier we are definitely looking forward for joint productions of products and systems required for the Indian armed forces by manufacturing them in India. We have a joint venture with Meritor and we are currently supplying axles to all the leading manufacturers in the country for all their heavy duty vehicles which are supplied to Indian defence forces.

SP’s: Do you see a positive turn in defence procurement procedure, which is very cumbersome at the moment?

Kalyani: Defence procurement procedure is constantly evolving. We now believe that good procedure is in place based on a good policy. Need of the hour is to operationalise the intent into actionable process. There are small operational issues which need resolving in respect to licensing, foreign exchange rate variation and on taxes and duties. I am sure all those involved are seized of the necessity to reduce the impediments wherever necessary to make it a faster and more transparent.

SP’s: What is the right way to stimulate the manufacturing sector in India?

Kalyani: Manufacturing in our country has always been the least glamorous. We need to bring focus back to manufacturing. We need to celebrate our successes in manufacturing and bring about a change in the way we look at this sector. This sector is important for the growth of the country. Country has laid out a target for to increase the share of the manufacturing to 25 per cent of the GDP but we are nowhere near this target value. Defence and aerospace and correct use of offsets can help give the required impetus to manufacturing. We must put into place a structure which can ensure we are able to reach this target in a time bound fashion.