29 October 2012

Think Tank: India’s Missile Production Ironies

Agni V (Wiki Info) made by BDL

A recent report by the Ministry of Defence on 25 October indicated that Bharat Dynamics Limited (BDL) presented a dividend cheque of Rs.47 Crore for the financial year 2011 - 12 to the Defence Minister Shri A K Antony. The dividend is 40.87% on the paid up share capital of Rs.115 Crores. BDL is the Public Sector unit under Ministry of Defence, Govt of India. This is the highest- ever dividend paid by the company, a Mini-RatnaCategory–1 Company, which has achieved a record turnover of Rs.959 Crores during the financial year 2011– 12. To meet the growing demands of the Indian Armed Forces, BDL has embarked on an expansion drive. The company is setting up shortly its fourth manufacturing unit at Amravati in Maharashtra and the fifth one at Ibrahimpatnam in Andhra Pradesh as per the release.

The company has also signed two contracts with the Armed Forces for refurbishment of vintage missiles held by the Services. BDL has productionised Imaging Infra-Red Seekers for Nag Anti-Tank Guided Missile. With this, BDL has joined the elite group of companies producing Seekers in the world claimed the press release. 

Ironically on the same day, Ministry of Defence has recently approved a number of orders for missiles for tanks and infantry combat vehicles (Invar [25000 at Rs 2000 Crore], Konkurs M [10000 at Rs 1200 Crore] ). The Indian Air Force order for  200 BrahMos for Rs 6000 Crore has also been cleared. These will have to be partly fulfilled through revenue account. 

The irony of India’s defence production indigenisation should be evident as the BDL a public sector undertaking specifically charged with manufacture of missiles has given the government a record dividend on the same day as news reports indicate that the orders for Rs 1,200 Crore proposal for procuring 10,000 anti-tank guided missiles from Russia have been placed. 

While BDL the premier and only guided missile manufacturing firm in the country that has been in this business for number of years it is surprising that no efforts have been made to manufacture Konkurs-M missiles which continue to be imported from Russia even though over a decade or so has passed since its induction in the Indian army. There could no doubt have been challenges of protection of intellectual property and other issues but these could have been well resolved and the production capacity at BDL up scaled to avoid the large scale imports. More over with captive orders for missiles from the armed forces it should be no surprise that the BDL will continue to pay dividends to the Government year after year. 

This Article first appeared on Security Risks and is reposted here under a Creative Commons license.