Mr. Honor Kusami to please accompany Mr. Baba Kalyani on the stage for this fireside chat on private sector waror forging India's defense. Big round of applause ladies and gentlemen.
Ladies and gentlemen, it's a great privilege to be here on this fireside chat with Baba Kalyani, a person I respect tremendously because of his commitment to this area. There are many companies for whom defense is one of the things they do. For Baba Kalyani, he has done what generations of policy makers had said was impossible, which is build a world-class private defense artillery industry from an auto forging base. This requires commitment and today Kalyani Strategic Systems Limited, KSSL, has co-developed the ATAGS howitzer with DRDO, won the largest share of India's first major artillery buy since Bofors in 1987, and is now exporting Indian guns to Europe. Exporting Indian guns to the US supply chain and West Asia. And ladies and gentlemen, therefore Baba Kalyani and Kalyani embodies the private sector's arrival at the heart of Atmanirbhar Bharat. For that I congratulate you sir. Let's have a round of applause for that alone please because this is truly truly incredible. Good work you've done sir. I want to start by asking you to respond a little bit to the first comments we saw from the secretary, secretary of defense who also wears the DRDO cap and the Raksha Mantri. I saw in their introductory comments a clear commitment towards Atmanirbhar Bharat. It was not an embellishment. It was a strategic goal. Your thoughts of what you heard from them at the start?
You know, first of all, I think we have to recognize the fact and give credit to our government, Prime Minister Modi for setting up this whole Make in India and Atmanirbhar mission. After 2014, the Ministry of Defense and Shri Rajnath Singh who has been spearheading this for many years now along with the defense secretary, the defense secretary production who is present here, there has been tremendous change as the defense minister himself said in his talk in terms of the mindset, in terms of how business industry both private and public perceive this whole Atmanirbhar concept. I think it's a journey as you said, but for people like me and there are many in this country who have a feeling for India to become a superpower, the nationalist feeling that we need to be somebody who is recognized, put in efforts in this direction to do things, and what Arnab just talked about in terms of the ATAGS or in terms of whatever other things that we are doing is I think a step in that direction.
Now in 2011 nobody could have ever believed, I we must be a little candid about what has changed here because the big issue is trust. We have always had this belief that it's easier to buy than to build, and why take the trouble? And then there are all these qualitative dimensions which are brought in, and that's why we've lost a lot of time. Nobody in 2011, 2010 could believe that a private forging company like yours will be supplying, and you had zero defense pedigree, sorry to point that out but it's the reality. You had zero defense pedigree, but he had intent, intention, and I think a spirit of nationalism that you could build artillery for the Indian army. Now you are 14, 15, 16 years later, you are exporting guns to Europe and the US supply chain, right? And our own army has, is about to, I hope, going to place you a firm order. What is the gap? Why is it that you have global validation, right? And what is it about domestic trust that we need to address? You see, do we need global validation before domestic trust? Do we? No, it's an issue we have. It's a thing we have. Do we need global validation before trust in India? And what can we do to bridge the gap? And that's happening at a time when the government has already committed itself to Atmanirbhar Bharat, so you have a salubrious environment, right? But is that getting into practice?
I think you know, you're right. When you had the first conclave three years ago, I think that probably was pretty much valid. I had spoken about this in many conferences that we need to create a much larger level of trust between industry and defense system. But now with all the policies that have been put into place, okay, we still have a process that we have to follow. Some of these processes definitely need to be looked at. Yeah. And it's not a matter of trust so much today. I think people do realize in the services that industry has come of age. Industry can deliver products. Industry can make products. Now it's a question of somebody saying that we don't need this process. We need to do it faster, shorter. I mean there are so many new technologies of computer simulation, AI, digital technologies that we need to start using to cut down the whole process of approvals. I can just tell you one process which is, I find that is a big bugbear, and that is a process called FOPM. It is FOPM, first of production manufacturing or whatever. This happens after 7-8 years of your product being tested in the winter, in the summer, all over the place, and then when you start producing you have to make one, I have to make one gun and subject it to this FOPM. It has to run around something like 14 laboratories for all kinds of tests, and before this FOPM approval comes you cannot order a single piece of raw material or input or anything. So your whole process gets delayed to that extent. So I think these are quite antiquated processes, they need to go from the system. I think army has more of these processes than the navy or the air force. And I would seriously think that a lot of introspection is required for this.
I want to respond to that also. On behalf of Republic, welcome General Rajiv Gai who just came in and he's just taken charge as the military adviser of the National Security Council. Thank you very much for coming sir. We're all very fortunate to have illustrious people in the audience. General Pakshi and so many others. I agree with you on that sir because the ATAGS program, if you look at it, it went into development in 2013. It took 12 years. Do we have that kind of time? The forces are delighted at the recent push, but for that push to be incessant and intense, we must highlight that it took 12 years from development to a firm domestic order. And it's 38 years since Bofors for India to sign its first major artillery contract. In today's day and age with non-contact warfare and the kind of developments that we have seen, we want to know what is the bottleneck. Is it technology? Is it trust? Is it turf? Or is it DRDO versus DPSU versus private industry? Is there conflict? How do we speed up the process? Because we don't know where the next war is going to come from and how we'll have to respond.
You're right, Arnab. You know, if you look at the West Asia war, I think it is teaching us a lot of lessons. First of all, the biggest lesson is even the biggest countries in the world like the United States is running out of ammunition. Whether it's missiles, whether it's rockets, whether it's whatever form of ammunition, they're simply running out of it. And you take this whole story of cruise missile, that famous cruise missile that US uses. Now I'm told that they need to produce, increase production by a 100 times compared to what they have been producing. They want to produce 28,000 cruise missiles and keep them in stock. So the solution that they have found, I mean actually they didn't find a solution, the industry found a solution. There was a company in California called Divergent Technologies. This company was manufacturing 3D printed parts for BMW and for Audi and supplying to these companies basically components for chassis etc. So he realized, the entrepreneur, the person who owns Divergent Technologies, that he can easily repurpose his equipment and make the entire cruise missile using an AI based design that he generated, and he produced a cruise missile, the Tomahawk missile. Yes, at one-tenth the cost in less than 6 weeks time from scratch, and Pete Hacket who is the secretary of war went to visit him and saw the facility and on the spot gave him an order for billions of dollars. Now that is trust, and that is what I think we lack. So do we lack trust?
Well I don't know whether you call it trust or whatever you call, I'll use the word...
Okay but I think that is where we need to be because
The question is like this. I am amazed that you have, first I'm amazed at the order you are supplying 100 guns including 18 ATAGS to European buyers in 2024, that's a full year before the Indian army signs its own contract. Now I love the Indian army, my father was in the Madras Sappers, please don't take it wrong, I love them, general don't look at me like that, you know I'm scared of you. Yeah. But the general guy, you know, I love the Indian army, but I find it strange. I think that what is the problem with our procurement? I don't want us to operate like America because there by the way you don't even need Pete Hegseth. Donald Trump can order missiles like he orders from McDonald's, but he can put in a Deliveroo app on that. But the question is that is procurement the single biggest handicap we are facing and we need to be candid about it. We need to talk about it before Indian defense manufacturing is, because what is the problem? Technology, capital, people say no problems. So is the procurement process a problem? It's a serious problem we have because we have so much catch up to do.
Yeah, procurement process is a problem. There's no doubt about it. I don't think technology is a problem. I fully agree with what the defense secretary said in his talk about DRDO. We do a lot of work with DRDO. We are DCP partners with DRDO. ATAGS came as a partnership with DRDO. We and the Tatas were two partners who produced this. The small arms that we are making, we got the largest order for carbines that Indian army has ever placed on anybody. 250,000 carbines. This will go into production in the next few weeks. It is again a DRDO design. So I think there is a lot of technology capability in this country. The problem...
How do you view DRDO? You co-developed ATAGS with DRDO. You've seen the organization from the inside as a partner, not a critic. How is DRDO doing well enough? And you know, has it made the shift from a developer of everything to an enabler of development?
I think DRDO has made the shift very well. DRDO has now become an organization that develops technology, that develops products in partnership with industry, sometimes private industry, sometimes public industry, and they do it very fast. I mean I'll give you two more examples. We have just developed the two FICVs, the wheeled and tracked version.
Probably the most modern FICVs that you can find on this planet today.
You know, America was trying to sell us some junk which is like 30 years old, couple of months ago, last year or something. I think you would know this very well. But we have developed this FICVs again, our we and Tatas were the two partners, DCP partners. So we developed a track version, we developed a wheeled version and it is 100% indigenous. Everything on that right from the engine, transmission, everything is made in India.
Push the envelope on that, you know, because the problem is that if you are going to plan your manufacturing, suddenly you become very popular in West Asia, suddenly I'm just talking about you and other defense companies, you become popular in the US. I mean, you know, AM General has just signed to offer your Mark 52 for the US Army's mobile tactical cannon program. So, you're manufacturing for Americans, right? And you unveil the world's first 4x4 mounted 155mm gun at Eurosatory this June. Now, these are NATO adjacent countries and they're hungry for infrastructure. They are hungry. We know what's happening in Ukraine. They are hungry for equipment. They're hungry for it. When NATO adjacent militaries start signing Indian artillery ahead of India's own forces completing traction, right? I don't want to ask you what does it say, I want to ask you that what will happen to the supply chain? Your manufacturing units, your finite capacity, at the end of the day your manufacturing will all be clogged and you'll be manufacturing for the world. Will it be too late? Will then the production order take time? We'll have to take time to develop and manufacture for India. We'll waste time there.
I think what is not under... not just you sir.
No, I'm responding this as a country and as industry. What is not being understood right now is the way wars are being fought is completely changed. Okay. You look at the West Asia war. You look at the Russia Ukraine conflict. I mean it's completely changed. In Ukraine they are producing something like half a million drones per year. Housewives are making drones in their kitchen. Okay. I mean that is the way they are going and doing it. So they are simplifying technology. They are making it easy to produce. I mean they're making drones out of cardboard. Japan has just unveiled a drone that's made from cardboard. So it can be made in millions in any cardboard factory. So the way wars are being fought is completely changed. Now God forbid we have a conflict and we get into some problems like this. We don't have the capacity to support our armed forces either with ammunition, either with missiles or with anything else you need. You may have the guns, you may have arms, but you don't have something that comes out of it. And that is where the supply chain becomes important because the current thinking is that yeah, we have everything. You give an order for 100 pieces and the supply chain will happen by itself. But if you tomorrow need a thousand pieces, forget it. It's not going to happen. And that is what Europe is finding out. That is what the US is finding out. That is the learnings that are coming out of the Ukraine war and especially the West Asian war. How is Iran able to fight the United States?
Because it created in 20-25 years some thousands and thousands of missiles as stock as inventory.
So we're going to have to then do some forecasting. Right. Yes. And therefore this conversation today, this event, cannot be done in a silo. We can't talk about what's happening in India alone because we are subject to different kind of tremors on the global stage, right? I therefore want to comment from you, and this will be interesting to take our conversation forward. Secretary defense production is here, everybody's here. See, how do you view the global factors? You know, first of all, the global scenario of conflict unpredictable. We've never imagined that four years down, Ukraine Russia would still be happening, right? The war in West Asia is far from over, right? More and more countries are getting involved. Many countries with weak economies are punching above their weight. Example being Turkey because of their defense manufacturing capability. They're one-third or less than one-third of India's economy. But look at the way they're punching above their weight. Diplomacy is changing. Political leaders are becoming more immediate. They're all trying to be many Trumps. They want to decide on the spot, right? The bureaucratic processes have opened up. Diplomacy is being done differently. It's being done by the leaders themselves rather than by the diplomats who mainly become the executors in this situation today. I want to know how you are seeing the global defense industry environment. Right? We can't if we have a low base, that can't be the only reason we applaud ourselves. We started small, we're growing, we need to do something to quadruple. You run plants in various continents, right? And you're one of the original high-tech manufacturing plants. What are the, in a SWOT analysis, tell me just about the weaknesses and the threats that we face, the spots that the enemy can exploit.
The biggest weakness that I see that we face is more in terms of supply chain. And the reason why supply chain is going to become weakness is because Europe is rearming itself. It wants to get up to 5% of GDP and they are struggling. They're currently at some 1.8, 2%.
And they're spending and they're spending and so therefore a lot of supply chain around the world is going to get focused into Europe.
Okay. So we are going to find that some critical products that we still, we can't make everything 100% of everything ourselves. So some critical products will be a problem in the supply chain.
