3 Private Companies Express Interest in SPV Model for AMCA Production

India's ambitious Advanced Medium Combat Aircraft (AMCA) program is poised for a significant leap forward, with the formation of a public-private sector consortium taking center stage. This innovative approach, a first for India, involves the establishment of a special purpose vehicle (SPV) to oversee the manufacturing of the AMCA jet.

Three private companies have responded to the Ministry of Defence's Expression of Interest (EoI), indicating their keenness to participate in this groundbreaking venture. The SPV, with a majority stake held by the private sector, will be responsible for the assembly and maintenance of the AMCA jet, which is projected to enter production around 2032-2033.

This public-private partnership model is expected to harness the strengths of both sectors. The private sector's expertise is anticipated to streamline production processes and enhance efficiency, while government involvement ensures strategic oversight and adherence to national security considerations.

The names of the companies joining the SPV are expected to be announced within the next six months.

This collaborative effort represents a pivotal moment for India's defence production landscape, potentially paving the way for increased private sector participation in future projects, fostering innovation, and accelerating India's journey towards self-reliance in defence technology.

As the AMCA program progresses, the world will be watching closely to see how this innovative model unfolds and its impact on India's defense capabilities.

 

[Anant]

You will know it in 6 months, May be folks here have memory loss, I am very clear and have a very good memory.

I have been knowing stuff for over two decades now. AMCA is still over a decade away from entering service.

 

[kumar]

Why should they, if they are going to get slapped in the face for their troubles? Look at the Navy: They committed to procuring Indian-manufactured diesel engines in the 1980s, and along came Kirloskar Group to build them under license. Now, Kirloskar Group is developing its own diesel engines, and the Navy is ready to get them.

On the other hand, we have Tata, who developed the WhAP, only for the Army to start running for the Stryker the moment they got the opportunity. Tell me, if you were leading the defence division in Tata, and you were looking at this scenario where license production / screwdrivering was getting you large returns (as is the case with the C-295) versus a product developed by Tata themselves getting thrown aside, would you be willing to commit for more R&D?

Remember that private companies are not the same as PSUs. Private companies are very strongly answerable to their shareholders, and their primary motivation is to make money. If you deal with them, you do so on their terms.

I know about IA procurement and I have highlighted it umpteen no of times. But with navy and IAF they can take risks and they are cuting edge and need risk taking. That is what I am highlighting. IA procurement is screwed and private sector need not invest. There are enough example for private sector to walk away from land systems. Let IA fend for themselves.

 

[kumar]

Indian private sector are mostly crony and nonsense. Start ups have innovating mentality, competitive environment then private could reform .

Some of the private sector are crony and nonsense but some of them are seriously into deep tech and have performed better. But, in case of IAF and Navy, they should be more forthcoming to take risks atleast those with deep pockets.

 

[Anant]

I know about IA procurement and I have highlighted it umpteen no of times. But with navy and IAF they can take risks and they are cuting edge and need risk taking. That is what I am highlighting. IA procurement is screwed and private sector need not invest. There are enough example for private sector to walk away from land systems. Let IA fend for themselves.

Boss, I don't disagree that the Navy, and to a lesser extent the IAF, have proven to be more willing for indigenous items. However, without the participation of the Army, this cannot move forward.

The reason for this is very simple: The Army gets the biggest share of the defence budget in India. Even today, the Navy gets less than 20%, and there is a case to be made that the Navy's responsibilities are quite possibly the most vast. As such, the Navy or the IAF simply do not have the spare cash to experiment beyond a point. They do try, and that in itself has paid dividends, but there is only so much that can do.

Let me put it this way: Maintaining a large armed force is expensive. The Chinese have an armed force that is similar in size to ours, and even with a defence budget atleast four times our budget, the average Chinese soldier is still not as well-equipped as they would like. You can either have good stuff, or you can have cheap stuff. The Army needs to understand that. Either you increase India's defence budget and be willing to spend more, or you innovate and try to reduce costs (which again requires you to accept that you'll spend money and possibly lose it without good results), or you simply accept that you'll not have equipment that is as good. Alternatively, you just buy stuff and don't innovate. The Army seems to be going with the third and fourth alternatives, with a slight flavouring of the second.

The sad truth other matter is that due to the quantum of manpower, funding, and equipment requirements, any large-scale indigenisation effort led by the private sector cannot succeed unless the Army is also proactive.

 

[kumar]

Boss, I don't disagree that the Navy, and to a lesser extent the IAF, have proven to be more willing for indigenous items. However, without the participation of the Army, this cannot move forward.

The reason for this is very simple: The Army gets the biggest share of the defence budget in India. Even today, the Navy gets less than 20%, and there is a case to be made that the Navy's responsibilities are quite possibly the most vast. As such, the Navy or the IAF simply do not have the spare cash to experiment beyond a point. They do try, and that in itself has paid dividends, but there is only so much that can do.

Let me put it this way: Maintaining a large armed force is expensive. The Chinese have an armed force that is similar in size to ours, and even with a defence budget atleast four times our budget, the average Chinese soldier is still not as well-equipped as they would like. You can either have good stuff, or you can have cheap stuff. The Army needs to understand that. Either you increase India's defence budget and be willing to spend more, or you innovate and try to reduce costs (which again requires you to accept that you'll spend money and possibly lose it without good results), or you simply accept that you'll not have equipment that is as good. Alternatively, you just buy stuff and don't innovate. The Army seems to be going with the third and fourth alternatives, with a slight flavouring of the second.

The sad truth other matter is that due to the quantum of manpower, funding, and equipment requirements, any large-scale indigenisation effort led by the private sector cannot succeed unless the Army is also proactive.

We all know how much IA wants indegenization, dude. I have been following defence for decades now. No amount of sugar coating whether it is about budgeting or other easy paths is going to change the fact that they have consistently found a way to keep local products away. They only want to keep thier gravy trains running in one form or the other. What IA needs more than being proactive or anything else, is change in mindset from buyers mindset to builders mindset, instead of big talks about indegenization by IA chiefs.