Despite India opening up its defence industry to private players, Russian suppliers still find it more convenient to work with Indian public sector companies. Concerns over experience and expertise are the main reasons, experts say.
Since the new policy was approved in May this year, Russian defence companies — unlike OEMs from the US, Israel and Europe — have been less active in signing MoUs with Indian private sector players such as the Tatas, L&T, Reliance Infrastructure, M&M, Bharat Forge and Ashok Leyland.
Despite being one of India’s major suppliers of weapons, Russia has not been very vocal about India’s strategic partnership policy in defence sector. From 2012 to 2016, Russia accounted for 68 per cent of India’s arms import, according to Stockholm International Peace Research Institute, followed by the US (14 per cent) and Israel (7 per cent).
Jayant Patil, Whole-time Director and Senior Vice-President (defence business) at L&T, told BusinessLine that Russian OEMs have not really understood the extent to which India has been changing. “Russian OEMs want to transfer technologies only to State-owned companies and seek government guarantees. With this they will miss out, except for mega deals that will be facilitated on government-to-government basis,” he said.
A Russian industry expert who has been representing several of the country’s defence companies in India for the past 10 years, says Russian suppliers are more comfortable to continue working with PSUs. Private players lack experience, and this concerns Russians, he says. “You can build factories and shipyards over a couple of years if you have the money to invest, but building technical expertise requires decades.”
However, Konstantin Makienko, Deputy Director of the Centre for Analysis of Strategies and Technologies, believes Russian OEMs are willing to work with the private sector. “The question is whether India’s private sector is ready for creating sophisticated defence platforms from technological, management and workforce,” he said.
Victor Kladov, Director at Rostec Corporation, which comprises around 700 companies working in defence and other strategic sectors, says Russia is deepening cooperation with India amid strong global competition. “Only Russia has been transferring 100 per cent technology, allowing Indian firms to set up full-fledged manufacturing of weapon systems,” he noted.
Russia has already licensed manufacturing of Su-30MKI fighters, T90 tanks, RD-33 jet engines in India. The Brahmos missile is an example of co-development and co-manufacturing. These projects were implemented by Indian defence PSUs.
Russia’s most recent ‘Make in India’ initiative, the Ka-226T helicopters, is executed in collaboration with State-owned HAL. Russia is currently eyeing around $10 billion worth deals from India.