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Defence PSU won’t tie up with private players

Defence public sector undertakings (PSUs) are changing the rules of the game of joint ventures with private partners. A top source at the Department of Defence Production indicated this last week during a conversation.

Defence PSUs do not want to be tied to binding contract or even informal understandings with private players in terms of production or technologies of one or more products in case of change of requirements of the armed forces. If the armed forces change their qualitative requirements, the PSUs will remain free to get into fresh joint ventures with a different partner.

The defence production department source gave the example of the existing joint venture between Hindustan Aeronautics Ltd (HAL) and Samtel Display Systems to form Samtel HAL Display Systems Ltd (SHDS) in June 2007 to design, develop and manufacture various types of display systems for airborne, military and ground applications for Indian and international markets.

The ministry source had said that the HAL now favours dissolving the joint venture with Samtel, as it was meant only for ‘multi-function displays'. And, the air force now wants ‘heads-up displays'. So, he said, the HAL was ready to dissolve the joint venture with Samtel and, instead, go for fresh partner.

However, when queried – though the HAL took 28 hours to reply a five-point questionnaire – at the end it denied that it had any such intention. The defence PSU said in an emailed response, 'The planned product profile [of SHDS] covers multi-function displays, heads-up displays, helmet mounted displays, automated test systems etc.'

Though this indicated a communication between the defence PSU and the ministry, it still revealed that the 2007 joint venture agreement had covered all bases. The Department of Defence Production, however, is trying to be as flexible as possible in terms of acquiring expertise to develop and manufacture high technology equipment that for the ever-changing needs of the armed forces in terms of their preparedness.

While there is still a complaint from the domestic manufactures and vendors that the QRs of the armed forces reflect a combined knowledge of foreign manufacturers’ brochures and their own wishlists, slowly a regimen is being set by the ministry to bring in as much of professionalism as possible.
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