The first major hurdle to "Make in India" in defence manufacturing appears to be coming from an old friend, that is, Russia.
In October 2016, India and Russia agreed to jointly manufacture Kamov-226T multi-utility helicopters in India for the three services. The agreement was presided over by Prime Minister Narendra Modi and President of the Russian Federation Valdimir Putin. It was the first major defence venture under the Modi government's "Make in India" programme. But there has been no progress since.
The Kamov-226T is a twin-engine helicopter known for ruggedness and performance. Faced with the need to replace the ageing Cheetah and Chetak helicopters, India planned to manufacture as many as 200 helicopters.
Top defence ministry sources told Huffington Post, India, that the two countries haven't yet decided on the exact price of the helicopters. The price being quoted by Russia is much beyond New Delhi's expectation.
More importantly, Russia isn't very comfortable sharing technology with the Indian private sector. The agreement specified that Hindustan Aeronautical Limited (HAL)— the Indian defence public sector unit — would get Indian private sector entities as partners to manufacture various components for the Kamov-226T helicopter. Not happy with this involvement of the India private sector, Moscow has held back "critical clearances".
"Much of the Russian defence manufacturing is state owned. While India is trying to boost the nascent private defence manufacturing industry by making HAL the main integrator, Russian defence industry isn't very sure about involving sharing technology with the private sector," top defence ministry sources said.
Under this joint defence manufacturing venture, signed on the side-lines of the BRICS summit in Goa last year, India and Russia agreed for complete transfer of technology and joint production of Kamov-226T helicopters in India.
The decision to make helicopters in India follows the Inter-Government Agreement on "Cooperation in the field of Helicopter Engineering" singed between the two countries during Prime Minister Modi's visit to Russia in December 2015. The two sides had agreed to set up a joint venture with the Russian government firm Rostec Corporation holding 49.5% stake and HAL holding 50.5% stake.
India–Russia ties are time-tested, and India considers Russia to be its most trusted strategic partner. However, the ties between the two countries had come under some strain: Kremlin perceived that New Delhi was increasingly depending on the West to source defence equipment.
The Modi government has been trying to re-energise bilateral relations. During the signing of October 2016 agreement, India had assured Russia that defence cooperation and manufacturing would be one the key pillars of Indio–Russia relations. Jointly producing helicopters for the Indian Navy, Indian Air Force and the Army was expected to revitalise ties. Apart from helicopters, India had also decided to source warships among other defence platforms from Russia.
The three services and the Coast Guard put together need about 400 helicopters. While HAL is developing the light-utility helicopters, India decided to source 200 helicopters from Russia to replace the aging fleet of helicopters.