UP INDUSTRIAL DEFENCE CORRIDOR (UPIDCO)

UP INDUSTRIAL DEFENCE CORRIDOR (UPIDCO)

STUDY BY STRIVE

Source UPEIDA Website

Capability Building & Atm Nirbhar Bharat

1. Changing Face of Warfare and Increasing Demand for Defence Equipment. Future wars are going to be fought in domains hitherto unforeseen. Days of tanks, guns and firepower are not over yet but war fighting will shift decisively into domains of cyber space, aerospace and information space driven by AI, Big Data Analytics, and Internet of Things (IoTs). Not that era of conventional weapon platforms is passé; they will remain relevant albeit at lower priority of use. Since manufacturing units of conventional weapons platforms already exist and are well established defence corridor units being green field initiative must focus on niche defence technologies. The Defence Corridors must shape up as hubs of state of the art defence technologies focusing on wars of the future. This will inevitably propel India into a global leader of defence technologies. The statement appears like a dream but unless we dream, we can’t innovate and produce. Atm Nirbhar Bharat will key in perfectly if the Defence Industry Corridor project focuses on technologies of future warfare.
2. Measures to Promote Indigenization. The government is tackling indigenization of defence production on a fast track despite the COVID 19. India’s goal of self-reliance in defence, generation of direct/indirect employment opportunities and growth of private domestic manufacturers, Micro Small and Medium Enterprises (MSMEs) and Start-ups would be very well served with the suggested approach of Defence Corridor Program. The Defence Ministry’s recent initiative of promulgating a negative list of 101 defence items that cannot be procured through import route will further boost the growth of the Industrial Corridor. The negative list has been well formulated as it has given time for defence forces to continue with import of some crucial technologies required for capability development. At the same time inclusion of some state of the art technologies to be manufactured indigenously will challenge the indigenous players to produce them on fast track. However, it has laid down a time limit before which the indigenous production of the concerned defence items must begin. Within this period, country’s manufacturing establishments and units including PSUs will have to come up with indigenous option. Addition of the Buy – Indigenize, Design, Develop, and Manufacture (Buy-IDDM) is likely to expedite the Make in India program of the country. Further, since reorganization of the MoD and appointment of Chief of Defence Staff (CDS), MoD has already sanctioned indigenous procurement of major weapons amounting to Rs 5100 crore earlier this year and 2290 crore announced by Shri. Rajnath Singh on 28 September 20. In fact last month on 27 August 20 the RM had announced the procurement of defence products worth Rs. 1.40 lakh crores domestically. This is a welcome development; it should give hope to small, medium, and big enterprises to invest in the Defence Corridors on a war footing since the government is creating the necessary demand pull on the Indian Defence Industry.
3. Defence Acquisition Programme 2020. Giving further impetus to the indigenization push, the RM released the new DAP 2020. The salient highlights are firstly, the DAP 2020 has aligned itself with Atmanirbharta and facilitates indigenization of defence industry through Make 2 initiative. Secondly, it has a vision to transform India into a global defence manufacturing hub. Thirdly, it includes provisions to encourage FDI to establish manufacturing hubs both for import substitution and exports while protecting the interests of Indian domestic industry. Fourthly, it contains a new chapter covering enabling provision for Services to procure essential items through Capital Budget under a simplified procedure in a time-bound manner. The concerted drive by the Central and the State Governments will definitely give the project the desired impetus.

 

UPDICO

4. One of the primary vehicle for indigenization of defence industry is the establishment of the two corridors north and south. UP Government has nominated UP Expressways Industrial Development Authority (UPEIDA) as the nodal agency to steer the activities of UPDICO. The nodes of UPDICO are Agra, Aligarh, Jhansi, Chitrakoot, Kanpur and Luucknow. They are well connected with Golden Quadrilateral and other expressways. This will facilitate the overall manufacturing process since all the nodes are in a turn round time of 12 hours from Delhi thus speeding up the supply chain management. State Government has also announced that most land allocation in various nodes is well on course..
5. Milestones Achieved. As per UPDICO web site, the UP government has nominated IIT Kanpur and BHU as the Centres of Excellence (CoE) of Defence Corridor. It has sanctioned Rs. 50 crore and Rs. 69 Crore respectively to the two institutions against this an amount of Rs. 2 Crore each has been released to the two institutions. A commitment to invest Rs. 3700 crore was announced by Defense PSUs in 2018 and 32 MoUs have been signed by some private Industries to set up units in the UPDICO in February 2020. UP Government has also decided to setup Common Facility Centre (CFC), CsoE and skill development sector (SDC) to facilitate the incorporation of best practices, research and development in the manufacturing process. The SDC should target the specific needs of the skills required for Aerospace, Weapon Systems, Ammunition &Explosive, and State of the Art technologies related to electronics and cyber space required by the Industry likely to come up in the various nodes. The impact of the Defence Corridor initiative would be felt on manufacturing as well as employment generation. The proposal to establish a Defence Park as a joint venture of UPEIDA and IIT, Kanpur on 30 Acre land proposed in Shivli near IIT Kanpur is in final stages of approval by the UP Government. Similarly, the setting up of CFC at Lucknow is being initiated, to carryout Prototyping, Designing, Skilling and Incubation etc. This will further boost and encourage MSMEs and SMEs to set up units in the corridor. Given the proximity of Noida, Jhansi, Agra, Lucknow, Aligarh and Kanpur with Delhi the nodes should also attract international players to invest especially post the likely exodus of manufacturing units out of China after COVID 19. The land allotment has also commenced. The available land bank details of the various nodes is shown in the figure below.

 

Source UPEIDA Website

Challenges

6. The Problem Areas. Defence Corridor Project in UP appeared to have shown enough promise and progress especially after signing of the 32 MsoU and timely allocation of land in various nodes. But COVID 19 and few systemic problems have impeded the progress? Make in India proposal of the GoI has undergone a number of iterations but the progress on ground has not been very encouraging. Despite revising the policies, increasing FDI beyond 51% (now it stands at 75%) foreign players are not enthusiastic. This could be attributed to many factors such as strangle hold of Defence PSU, OFB and DRDO which does not provide level playing field for Private Players. Despite the sincerity of private players such as L&T, Tatas, Mahindra, Reliance, Zen Technologies etc., the influence of Defence PSUs, DRDO and OFBs comes in the way of private players. Similarly, lack of hand holding by the Government of MSMEs and SMEs during indigenous development in terms of funding, facilitating foreign partners in development and assured orders or assistance in exports of defence systems acts as a dampener in domestic production. Another area of concern has been skill development for which academic – industry (public & private sector) partnership is essential. The complex nature of defence manufacturing, design, and development especially in the aerospace sector requires a focused program of skill development. It is very encouraging that UP Government is setting up the SDC, Defence Park, and CFC. Development of CFC should target creation of testing facility for various defence systems within the UPDICO. This will help the MSME and SMEs to validate their products within the corridor. It is a matter of pride for UP that it has improved its ranking within the country in “Ease of Doing Business” and stands second in the ranking. Only Andhra Pradesh is ahead of UP which has left behind leading states like Gujarat, Maharashtra, and Tamil Nadu etc. But what needs to be watched carefully is that how well it has reoriented its policy towards facilitating defence manufacturing units then only the UPDICO will stand to benefit. Towards this end, publishing of Defence and Aerospace Unit and Employment Promotion Policy (First Amendment) 2019 by the UP Government to attract investments may provide the necessary fillip.
7. Additional Observation on the Status of UPDICO. The initial progress has been very encouraging. However, the MsoU are just promissory in nature and need to be progressed very closely by a dedicated team for each industrial sector. Also, the leading industrial houses other than Tata’s are missing from the list. Similarly, adequate number of Foreign OEMs are also not there in the MoU. This aspect needs to be followed up by the UP Government through a high level committee working in close coordination with the Central Government. The opportunity of industries wishing to relocate from China due to its confrontationist attitude on various international matters must be harnessed expeditiously. Another area which is conspicuous by its absence is the niche sectors of AI, robotics, software, and hardware development industries. This is the future and it needs to be given the push it deserves if UPDICO has to emerge as major hub of defence production. Private and Public Sector Undertakings have to be motivated and encouraged with additional sops to come and establish green field manufacturing, designing and development units.

SDC – KEY TO PROGRESS OF THE PROJECT

9. A major fallout of the UPDICO would be employment generation. However, for this, the skill development centres and industry academia cooperation is necessary. We also need to be cognizant of the fact that UP is deficient of high technology enabled skilled manpower. Therefore, till the time a high quality high end state of the art technology enabled skilled talent pool is available, tapping the ex- servicemen potential of personnel who have worked in the field of aviation and electronics belonging to UP will greatly assist this in overcoming this problem. A possible approach to create the SDC is discussed in succeeding paragraphs.
10. The Aim of the planned SDC would be as follows:

• Creation of a high end state of the art technology enabled talent pool within UP in the field of aviation, electronics, software development, communication, weapons, ammunitions and explosives systems to provide workforce for the industries coming up in the corridor.
• Generate employment opportunities for the people of the state.
• Role of Ex – Servicemen in providing high end skilled and administrative power for the establishment and functioning of various industries in the corridor.
• Recommended Government policies, organisation, and operating procedure for management of the Skill Development Centres.

11. Analysis of the Aim. In order to achieve the above aims a study of the Existing industrial base in UP following aspects was felt necessary:-

 

• Type of Industries that are likely to be established in the corridors.
• Type of technological skills required by the industry.
• Method and means to exploit the talent pool available in ESM fraternity of UP.
• Gaps in technology needed and available in the UP and the ESM talent pool would dictate skill specialties to be targeted in the proposed skill centres.
• Policy Guidelinesfor such an initiative have to be robust, enduring, and technical in nature free from external interference on the lines of Metro Management. Help of IIM Lucknow could be sought to manage the Skill Centres.
• Remuneration must be comparable to the best in the industry or else we would not be able to attract high quality talent.

Likely Defence Industries in the Corridor

8. Likely Sectors of Investment. If 32 MoU are any indicators the industry has shown interest in a number of sectors which are tabulated below :

Sectors	Firms / Organisations	Locations
Aviation including Maintenance Repair and Overhaul (MRO), Engine Air Frames, Simulators, Manufacturing of components. Aviation Testing Facility	Titan Aviation & Aerospace India Ltd LLP ( Anchor Research Lab) TexmacoDefence SystemsPvtLtd NityaCreationIndia	Jhansi, Aligarh
Avionics and Radars, EW	MSK Business Solutions India Pvt Ltd P2 Logitech	Noida Agra Kanpur
UAV & Drones Related Technologies	BDL – IIT Kanpur Allen and AlvanPvtLtd	Lucknow – Agra Aligarh
Propulsion, gearboxes, auxiliary power gas. Turbines Generators, steam                     turbines	Triveni Engineering & Industrial ltd. Spicejet Technic Pvt Ltd. PBM Insulations Pvt Ltd	Aligarh Noida
Software related Industries	Vitor Cloud Technology	Location not yet declared but most likely NCR/Noida
Weapon Systems and related products	Syndicate Innovations International Ltd OFB – AK 103 Project Osho Corp Global Pvt Ltd Sri Hans Energy Systems	Not yet declared Lucknow     Aligarh     Kanpur
Ammunition Cartridges Explosives	STUMMPS Schuele and SOMMPPA Ltd	Jhansi / Chitrakoot

Source UPEIDA Website

9. However, the above spectrum is just the beginning. Given the existence of existing industries in the countries additional areas of investment in the corridor could be as follows:-
   • Overflow and or ancillary products of Arty guns from OF Jabalpur.
   • Unlikely establishment of vehicle manufacturing either by Pvt Players or OFs. However, electronic components which are being introduced in such systems could be produced in the corridor.
   • In aerospace HAL is a leader and it already has a setup in UP. However, in the current state HAL is already behind schedule in meeting orders of the three services so there is a scope to ramp up manufacturing by establishing component manufacturing of some of its ongoing products to meet the target of the country and then also explore export possibility as well. Similarly, aviation maintenance, repair, and overhaul facilities could be established with the active partnership of HAL.
   • Another area which looks promising with scope for continued production is manufacturing of Ammunition and explosives of all types from air craft, missiles, armoured systems, arty systems, and Infantry weapon systems.
   • Niche communication and electronics systems based on AI.
   • Robotics for war fighting including production of drones both armed and un-armed for surveillance and logistics.
   • A feasibility study for space based component system manufacturing could also be carried out. However, this will need further study.

Nature of Skills Required for the Industries in the Corridor

10. Important consideration for skill development within UP are as follows :-
    • Availability of quality ITI institutions is at a premium. These institutions will need to be refocused to changing technological landscape and the needs of the likely manufacturing units that may come up in the Defence Corridor.
    • Skill matching based on what is available within the productive educated youth of UP in ITIs, and various Engineering Institutions manpower base in UP needs to be carried out. The gap would then provide the technologies to be focused upon by the SDC with the various education institutions in the State.
    • It may be worth considering by the state government to direct host of private engineering colleges that have come up in the State to focus on skill based education offering diploma in niche technologies. If software companies can absorb graduates, they will be more than happy to induct skilled technical manpower catering for their specific needs.
    • The proposed Skill Development Centres should offer advance skill training to both on the job personnel and fresh graduates of Diploma courses passing out from the ITIs or Engineering College Skilled Diploma Holders as per the suggestion given above in para © above.
    • New Skill centres will be required for selection and training in emerging state of the art technologies preferably under IIT Kanpur or BHU duly supported by Polytechnics and existing Skill training centres of the Industry such as HAL, HCL, Tatas and OFBs.
    • Number of Skill Centresmust be coterminous with various nodes. Aim should be to spread the employment opportunities over a larger geographical area. Off course, this should not be at the cost of quality of training.
    • Training for skill set already available could be organized in the form of refresher skill centres preferably under arrangements of the industries. Harnessing Sainik Kalyan Nigam and DSSA boards as selection and training agency along with the knowledge partners IIT/BHU for tapping the high end skilled ESM manpower including their refresher training management will prove beneficial.

 

11. Tapping the ESM Talent Pool :-
    • Skill Matching. Training in Armed Forces is tailor made for the requirements of armed Forces and many a times when they retire; skills that they had acquired are not in consonance with the requirement of the industry. Therefore, there is a requirement to get the personnel certified in the skills they acquire during the service with a certified agency in such a way that they are found to be at par with their civil counter parts.
    • Technical Skill Potential of ESMs, Trade training done in the centres be equated to ITI Training through certification from recognized technical educational institutions. Once the discharge warning is received, the person should be made to go through a refresher cadre so that he is fully prepared for the likely role in the defence industry corridor.
    • Role of ESM in the Industry.Jobs like platoon commander is equivalent to a job of a middle level management but in the absence of a necessary certification, they miss opportunities. Equivalence be established with civilian technical certification by the defence forces before they quit.
    • Technical Officer Cadre.Similar identification is needed in respect of officers also. This is the most neglected area and many of the retiring officers are offered only security related jobs where as their specialization lies somewhere else. Purposeful employment identification and preparation of officers is a big challenge and needs to be identified by the State Government by taking help of the DGR.
    • Industry-Resettlement- Training Coordination.While a system is indeed in place, but in its present form it identifies jobs but getting prepared is the responsibility of the individual. This system needs a reviewed by the Defence Forces where existing facilities are utilized to train our personnel and made ready for tasks in industry before they move out. It would entail preparing an exhaustive data base.
    • Area Specificity. Post retirement most of the people prefer to remain closer to their homes therefore while preparing people for post-retirement; employment, details of industries in their home districts should also be identified and personnel be prepared accordingly.
    • Utilization of Residual Useful Working Life. Except, Lt Gens/ equivalent rank personnel everyone else in the Armed Forces retires before the accepted useful service life i.e., sixty years. Therefore, there is a need to explore the possibility of absorption at parallel ranks/ appointments through a formal induction process; modalities for such an induction can be worked out.
    • Identification of Skilled ESM Manpower.Identifying skilled ESM manpower is a challenge due to lack of updated records of ESMs in the State, To overcome this problem, skill matching of ESM could be undertaken through an exercise by DG RR, from the time when digitization of records started. This data should be shared with the Director DSSA board and the Chairman Sainik Kalyan Nigam.
    • Age Requirement for induction of Technical ESM Manpower. The productive base for highly skilled requirement should be taken from manpower with ages less than 40 years in the case of ESMs.
    • Administrative Manpower Age Requirement.For administrative requirement, we could look at this being kept below 52 years of age.
    • ESM Talent Base.The number of ESMs registered with DGR in UP for job is around 5 lakhs plus. The skill survey needs to be commenced by utilizing the services of DSSA boards through all available means such as SMSs, letters and emails.
12. Employable Skill SetsAvailable skill set in the ESMpool are as follows:-
    • Aviation systems mechanics.
    • Electronic system mechanics.
    • Vehicle Mechanics.
    • Electrical Mechanics.
    • Communication Technician.
    • Computer mechanic.
    • Program writers.
    • General Duty / Supply Chain Manager.
    • Warehouse managers, supervisors and Handlers especially of high tech equipment (Store keeping technician).
    • Radar Mechanics.
    • Missile technicians.
    • Weapon System technicians.
    • Ammunition experts.
    • Engineers with M. Tech and B. Tech in almost all fields of engineering with hands on experience in defence weapons, equipment, and systems.
    • Designing and development experience in defence systems and products.
    • Language experts.
    • Library keeping.
    • Telephone / computer operations
    • Earth moving plants operation& maintenance.
    • Pipe fitting/ plumbing.
    • Pollution control operators.
    • Inventory management.
    • Doctors and Nurses with related trade expertise.

Policy Guidelines

13. Consideration for Policy Guide Lines. The suggested considerations for policy guidelines could be :-
    • Skill Centre Management committee could be appointed at the state level with functions of projecting the requirement of talent pool to be trained, reorganizing the ITIs to the needs of the industry and creation of additional training institutions in proximity of the various nodes.
    • Should have a top down approach.
    • Skill Centre Managers could be appointed to run the Skill Centres and organize the placement of trained manpower.
    • ESMs could also be put through these Skill Centres for refresher or new skill training. Their selection could be jointly done by Nigam and DSSA board along with IIT/BHU.

Conclusion

12. UPDICO has taken off well. Despite COVID 19 setback, the UP Government is doing a commendable job to keep the project on track. However, it needs to be now given a qualitative push. Inviting the big players, inducting niche technology sectors such as AI, Big Data Analytics, Robotics, Cyber, and Electronic Warfare technologies. Given the interest shown by the state leadership in UPDICO action in these areas may already be taking place with the other stake holders the MoD, Industry, and Financial institutions. The State Government in consultation with the MoD must also appoint a dedicated and expanded project management team to oversee the progress of various projects in UPDICO. Earlier the team comes into existence better it would be for the Industrial Corridor’s growth and development. It must look at the corridor from an all-encompassing perspective of incorporating the needs of Security, Defence, Aerospace and Disaster Management. As and when the UPDICO starts emerging as a major manufacturing hub, the NDMA, UPSDMC and MHA must establish their response mechanism to deal with any natural and manmade disasters including cyber and electronic space disasters.
13. R&D is an important constituent of Atmanirbharta. Knowledge partners of UPDICO like IIT Kanpur, BHU have to collaborate with DRDO, HAL, BDL, BEL, ISRO, DAE and Private Industry R&D wings to feed the manufacturing units with the state of the art technologies. The collaboration of Academia, Industry, and Research Organisation is an indispensable need for the UPDICO to progress. Presence of HCL and TCS in the state need to be exploited for this purpose.
14. Development of a nationwide industrial manufacturing ecosystem with seamless connectivity with UPDICO must be ensured for sustaining the industries that come up in the UPDICO. The business model must include import and export facilitation of critical technologies for manufacturing of defence components, equipment, and systems.
15. Assured market needs to be ensured for these industries to sustain. A mandatory provision to procure items and products from the hub would go a long way in sustaining the industries that come up in the hub by the users and public sector undertakings.
16. The primary aim of the UPDICO must remain to serve the Armed Forces with high quality and relatively cheaper option than importing exorbitantly costly equipment. At the same time, it must aim to increase the percentage of indigenous components in their manufacturing to be truly recognized as indigenous entities capable of serving the National Goal of Atma Nirbhar Bharat in Defence Production. Employment generation in defence equipment development must remain a secondary consideration. To sum it up in the long-run the initiative looks to be promising and will assist India in becoming one of the leading indigenous producers of niche technology driven defence weapons and equipment systems.