Baba Kalyani Hails PM Modi's Defence Vision; Says Company Working On Semiconductors | CNBC TV18

Yeah, absolutely. I mean, first of all, I'd like to express my heartfelt congratulations to the honorable Prime Minister for completing 12 years and wish him good health and all the very best for many, many more years to come. I think you're right. You know, the biggest transformation India has ever seen in the last 12 years has been in the transformation in industrial and manufacturing landscape. Started with the Make in India process in 2014, then went on to the whole Atmanirbhar process where defense manufacturing was then opened to the private sector and the private sector started participating in a big way in defense manufacturing. And now we have come to a stage where even the fifth generation fighter aircraft is going to be made by some private sector companies. So, I think that's a very, very great achievement that has been achieved by the honorable Prime Minister's policy. Apart from that, the space sector has been opened. We have now two private sector companies, startups in space, who are able to launch rockets in space. I mean, whoever thought 12 years ago that this would happen? So, there is a lot of excitement. There is a lot of can-do spirit. And I think there is also a tremendous amount of encouragement which has created a level of optimism in the 1.4 billion people that live in India, especially the younger ones. That's why you see all these startups and unicorns and everything happening in almost every field. So, I'm quite excited. I wish I was 25 years younger. Could have done a lot more, but anyway.

You know, I mean earlier defense was more at a component level as far as private sector was concerned. You made some small parts. You made some spare parts. You made a little bit of ammunition parts, etc. But now we are making platforms. We're making like eight axes a platform. And the most important thing is we are making platforms that are designed and built in India. Which means it's Indian IP. Whether it's designed by DRDO, designed by us, or designed in combination. I think that is the biggest structural change that we are seeing in the defense sector. And I mean we have now got an order for carbines. The largest order army has ever placed to any Indian private sector for making carbines for the army. And we are beginning to see now a lot of interest from outside India of people who make small arms saying, 'Can you manufacture small arms for us?' So, I think you're going to see a big explosion in this sector in the next 5-7 years.

Absolutely. I mean in our case alone, out of our total defense sales, almost 40% is exports. So, and we have got a lot more traction we are beginning to see from many different countries. So, let's see how it goes. There's a lot of, I mean Europe is rebuilding its whole defense industry. The US has started investing a lot more money in defense. We're beginning to see a lot of new technologies come in defense sector. I saw just few days ago in California, somebody has built a cruise missile using 3D printing, which is done at 1/10 the cost of a normal cruise missile. So, there is some tremendous change taking place in this industry. And I think this will help Indian companies to get into this case. Only thing is we need to make agreements with other countries so that we become part of their supply chain, which is not there today. So, I hope this happens soon.

I think we need to do little more on ease of doing business. It's still a little complicated when it comes to some sectors. So, that needs to be sorted out. In the defense sector, also, the process needs to be made much simpler than what it is today. But I think we are getting there, you know, it's going to happen step by step, and we are getting there. I think the honorable Prime Minister has put this as a priority in terms of what is required to be done. We also need to create scale. Especially when it comes to electric vehicles, we need to create scale. Because scale creates the ecosystem that's required to create technology. And I think creating scale in many areas becomes very, very important. We have seen in the case of solar energy what scale has been able to do. So, I think that's important. And we have to move towards becoming a product nation. We can't just be a service nation. We have to become a product nation. And products that are designed in India, made in India, and sold to the whole world including India.

Well, we are doing a lot more in defense. But you know about it already. The new area that we are working on is in semiconductors. Not to make semiconductors, but being part of the supply chain of semiconductor equipment. That business is pretty large. It's in billions of dollars. And we are already working, there are only five companies that are in the semiconductor supply chain, and we are working with three of them to see how we can make products for them and get into the supply chain. So, that's going to be the big thing coming forward.

No, these are companies like Lam Research, ASML, Applied Materials, these companies. And surprisingly, by the way, they all use metal parts for their equipments. Many of them are forgings, some of them are specialized machine parts. So, that's an area that at least we have got our eyes on.

Not making lithography, making the parts that go into a lithography machine.

No, we are moving ahead to become part of their supply chain, global supply chain.

Yeah, supply to them. And that's a very highly value-added product. So, but it's also quite complex, so it takes a long time to get validated in terms of becoming a supplier. But we are quite hopeful that in a year's time, we should be there.

Yeah, we are actually investing fairly large amount of capex right now even in our existing plants, here in Maharashtra, in Baramati, for example, we are putting in the most modern facility for making high technology forgings, for making high technology machine parts for data center power backup systems. And that's more than a thousand crore investment coming up. It'll be up and running by fourth quarter of this year. And we are very gung-ho about this because what we are finding is with technology changes, with AI coming up with full scale, there are so many new markets that are opening up which we didn't even understand before. And so many new products that we can make with the skill sets that we have, the knowledge that we have for the global markets. So, we are quite excited about this.

Yeah, you're right. I mean, you know, I think we need to spend a lot more money on R&D than what we are spending. We as a company, by the way, spend a lot more than what you're talking about, but I think the government has also set up this new research fund of almost 1 lakh crore, which is going to start being used by the private sector for R&D. But that's one area. If you don't do R&D, if you don't do development, we won't become a product nation. It's as simple as that. So, we are very clear that for us, if we want to make the products that we need to make, we need to spend more money on R&D, more money on product development, and more money on training people to be, let's say, digitally ready, AI ready. And that's another big lacuna that India is going to face in the manufacturing sector. Because in 5 years, your manufacturing sector has to be, you know, aligned with the rest of the world with the ability to use AI in manufacturing, AI and digital in your design and engineering stuff. So, I think there's a lot of work that needs to be done. But, also a lot of people are taking steps to make it happen.

Thank you, Prashant. Thank you. Bye.