Anil Ambani Best Poised to Capture FDI Defence Bonanza
NEW DELHI: Industrialist Anil Ambani is poised to capture big ticket defence contracts that are expected to come with the government move to increase Foreign Direct Investment in the defence sector to 100% with the condition for access to ‘state of the art technology’ being done away with. This has been replaced by the phrase ‘modern’ technology, whatever that is interpreted to mean.
This decision passed at a top level meeting chaired by Prime Minister Narendra Modi as part of the larger FDI policy, is to make it easier for private business to flourish in defence. Anil Ambani, either blessed with a sixth sense or specific information, moved rapidly over the past two years to establish himself as a major player, with now huge assets in Gujarat and Madhya Pradesh, in the defence sector.
The younger Ambani brother is clearly the new, over pampered kid on the defence block getting expansive government help to establish himself as a major player. He has travelled to many a destination with PM Modi, and is now readying to capture a sizeable chunk of the big ticket defence contracts that are expected to follow the FDI shake up. As reported by The Citizen earlier he set up Reliance Defence group of companies, hired known consultants from well known defence corporates like Lockheed Martin, went on to acquire the Pipavav company and shipyard in Gujarat, and is now busy bidding for defence licenses covering a wide expanse of weapons, ships, landing platforms and helicopters.
The US Multinational Lockheed Martin that had bid and lost for India’s lucrative 126 multi combat fighter deal (that was scrapped in a sense after Rafale secured the contract by PM Modi who whittled down the numbers to 36) was back negotiating in South Block earlier this year,for possible foreign military sales to produce F-16 Super Vipers under the Make in India initiative. It might be a coincidence of course that President of Reliance Defence and Aerospace Rajesh Dhingra is a former Air Force officer and Managing Director of Lockheed Martin India. Dhingra is considered to be a driving force in Anil Ambani’s new passion, having been hired early last year by the industrialist.
Earlier this, Anil Ambani added to his Gujarat presence where he had in a sense opened his defence account, by getting a quick nod from the BJP government in Madhya Pradesh for 300 acres of land with subsidies and tax concessions to set up a defence Special Economic Zone (SEZ). Reliance Land Systems Ltd will set up the defence park with a Rs. 3,000-crore investment at Pithampur Special Economic Zone (SEZ) in Dhar district. And Reliance Defence and Aerospace Ltd will establish the aerospace park at the cost of Rs. 1,250 crore,according to media reports quoting government officials.
The two ventures will get estimated subsidy of nearly Rs 500 crores from the state government under its industrial promotion policy. This figure does not include the other exemptions available under the SEZ Act that are expected to touch an additional over Rs 162 crores.
Its all been moving at a dramatically rapid pace. Anil Ambani initially announced an investment of an additional Rs 5000 crores in the Pipavav shipyard over the next few years to make it a one stop shop for all Indian Navy’s requirements including aircraft carriers, submarines and frigates. This comes after Pipavav signed an agreement with the Russians for medium refits and life certification of 877 EKM submarines in India. In a whopping $3.5 billion deal Pipavav has been selected by the Russians to build frigates in what is being seen as the biggest warship project in the private sector. He has also been attending defence-expo’s across the world, not just familiarising himself with the industry he has stepped into, but also ensuring that the world recognises him as a major private player in India with a defence budget and big thirst for weaponry and equipment that has the big MNC’s salivating over the mega-contracts in the offing.
The Economic Times reported in April 2016, “These days, the Reliance Group boss spends more than 70% of his working hours on what is seen as a sunrise sector for Indian industry. In the past year, he visited at least two global defence equipment manufacturers every month and signed partnerships with several of them. In between, from Paris to Dubai, Moscow and Abu Dhabi, he hasn't missed any major defence and aerospace shows.” And goes on to quote Ambani as saying, “"Prime Minister (Narendra) Modi and Defence Minister (Manohar) Parrikar have reposed tremendous faith in the dynamism and strength of India's private sector and the critical role it can play in the development of our defence infrastructure."
In November last year Anil Ambani received another government shot in the army when 11 proposals from Reliance defence group of industries were given conditional approval by an inter-ministerial meeting. It might be recalled that Reliance Defence Limited has raised at least 11 new companies on defence, with a Rs 10,000 crore plus market reportedly being targeted by each one of them.
Ambani’s rise in this crucial sector can be found in the following The Citizen reports: http://www.thecitizen.in/index.php/NewsDetail/index/1/3899/ADANI-AMBANI-RACE-FOR-A-SLICE-OF-THE-BIG-DEFENCE-PIE