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High on potential, and high on hopes too
 
Mr Modi does not go to France (and Germany) to explore the possibility of ‘smart cities’ or speak to the French People of Indian origins living overseas in the Reunion Island; he goes there to push his Make in India baby, first and foremost in the defence sector.

By Claude Arpi




During Modi’s France visit, it is difficult to predict what will happen with the Rafale deal, but if it goes through, it will become the ‘mother' of all ‘Make in India' projects and herald a number of win-win situations for India

A few days ago, before he embarked on a nine-day trip abroad, Prime Minister Narendra Modi tweeted: “My France, Germany and Canada visit is centered around supporting India’s economic agenda and creating jobs for our youth.” About the French leg of his journey, Mr Modi announced that he would “discuss strengthening India-France economic cooperation and visit some high-tech industrial units outside Paris, [while] seeking greater French involvement in our Make in India programme, including in the defence manufacturing sector.” Mr Modi’s visit to France should be seen in this perspective. Is it a coincidence that three days before Mr Modi’s departure for Paris, Defence Minister Manohar Parrikar ‘undocked’ the first of the six Scorpene submarines built in collaboration with the Directions des Constructions et Armes Navales of France at the Mazagon Docks Limited?

Intentional or not, it is an interesting example to look at because it is a great leap forward for the Make in India, which is not about manufacturing toys or cheap appliances, but being able to integrate the latest state-of-art technologies into India’s industrial process.  The Scorpene submarine also shows that despite difficulties and delays, it is possible for India to assimilate, in a relatively short time, the latest technologies. After the ‘undocking’ function, Mr Parrikar blamed the delay on what he termed as the incompetence of the previous Government. He might be right, but the fact remains that it is not an easy proposition to transfer technologies in an environment which is not always prepared to receive such technologies. And how to eliminate delays, frictions with the ‘supplier’ and price overruns?

In the case of the Rafale, the transfer of technology from Dassault and its partners to Hindustan Aeronautics Limited is bound to face similar problems, especially with HAL, famous for its bureaucracy and slow process. The contract for the Scorpene submarines was signed in October 2005 with the French company Armaris, a joint venture between DCNS ship builders and Thales. Six Scorpene submarines are to be built at MDL. While it is important to analyse the delays and cost overruns (from Rs18,798 crore to Rs23,562 crore) and take precautionary measures to avoid a repetition, at the same time, the difficulties of such projects can’t be underestimated.

This will be valid for all high-tech Make in India projects, especially in a country where research and development is still extremely weak and limited to a few Government mastodon undertakings, not fit for research. Despite a number of problems, the ‘de-docking’ of the first Scorpene submarine should be considered as a great success for MDL, the DCNS and their Indian and French partners. Though French and Indian officials are both tight-lipped about defence deals before Mr Modi’s visit to France, (especially at a time when, according to Dassault Chief Executive Officer, Eric Trappier, the Rafale negotiations are 95 per cent through), the issue will be on everybody’s mind during the visit.

Mr Modi does not go to France (and Germany) to explore the possibility of ‘smart cities’ or speak to the French People of Indian origins living overseas in the Reunion Island; he goes there to push his Make in India baby, first and foremost in the defence sector. During the recent air show in Bangalore, Mr Modi indicated a major change of direction: He wanted to end India’s status as the world’s number one defence importer; India’s objective is to have 70 per cent (from the current 40 per cent) of hardware manufactured domestically by 2020.

A few months ago, foreign investors realised that the Modi sarkar was serious when it notified an increase in foreign direct investment limit to 49 per cent in the defence sector. The move was aimed at boosting India’s domestic industry and creating confidence amongst eventual investors. It is difficult to predict what will happen with the Rafale deal, but if it goes through, it will undoubtedly become the ‘mother’ of all Make in India projects and herald a number of win-win situations for India and her foreign partners, especially in the small-scale sectors, as Dassault (and later HAL) requires the services of some 500 small sub-contractors to build the aircraft. The long-delayed deal will then be the largest transfer of technology of the decade.

It is also worth noting that another old ‘Make in India’ project has recently partially come through. At the end of March, the Defence Acquisition Council approved the Maitri project for the co-development of a short-range surface-to-air missile by the Defence Research and Development Organisation with Minority Business Development Agency of France. The project has been pending since 2007; Delhi will now go for the marine version only as the DRDO’s Akash missile system satisfies the Indian Army and the Air Force. The Maitri project, like the BrahMos with Russia, could become a success story for the Make in India. Will the signature of the SR-SAM deal be the ‘main dish’ of Mr Modi’s present visit?

One highlight of Mr Modi’s trip will be the visit to Airbus headquarters in Toulouse (the Prime Minister will probably be shocked to hear that the Chinese recently bought the Toulouse Blagnac airport). At stake in Toulouse, is a two billion dollar contract for eight Airbus A-330 MRTT mid-air refuellers, a deal pending for over two years. It may take more time to materialise. An interesting case is India’s participation in the International Thermonuclear Experimental Reactor, a project in which six-countries collaborate to generate nuclear fusion energy in France.

It is the Institute of Plasma Research in Gandhinagar which is responsible for the fabrication of the reactor’s crucial parts — the cryostat and the vacuum vessel, at a Larsen & Toubro’s plant in Hazira near Surat. Institute for Plasma Research director Dhiraj Bora, speaking at the recently held Gujarat Science Congress in Ahmedabad, explained: “The cryostat and the vacuum vessel of the International Thermonuclear Experimental Reactor Tokamak fusion reactor is the heaviest, the largest and the most central component.”

It shows that India can play a role at an advanced technological level. In the meantime, the French investments in India are progressing rather well with the total investment stock of French companies in India reaching nearly $19 billion. Today 950 French companies (350 companies and 400 subsidiaries, as well as 200 individual entrepreneurs) are said to be implanted in India; they employ some 3,00,000 skilled Indian workers.  A lot of water has flowed under the 37 bridges on the River Seine (in Paris only) since the strategic partnership was signed in 1998. A fresh start can only be mutually beneficial for both France and India.

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