'DNA' investigation: How military non-indigenisation helps vested interests

Almost 25 years have passed since BEML signed an agreement with Omnipol Foreign Trade Corporation, a company owned by the government of Czechoslovakia, to procure Tatra trucks and their components, but so far the Bangalore-based company has been unable to produce the trucks on its own.

The reason, sources say, is clear: non-indigenisation helps vested interests to continue to reap the benefits of trading profits, commissions, etc.

Indigenisation is the process of transfer of production of imported goods to the buyer country. It is needed to bring down costs, preserve foreign exchange, and become self-reliant. In this case, the process would be complete when BEML starts producing everything from the nuts, bolts to the engine.

“As long as higher value goods are purchased from abroad, that too though an agent [Tatra Sipox (UK) Ltd, in this case] ignoring the interests of the army, such vested interests benefit,” said one ex-employee of BEML.

India’s army uses Tatra all-terrain vehicles to mount guided missile launchers and haul heavy artillery apart from transporting personnel, supplies, tanks, ammunition and bailey bridges.

A source said the company has not achieved even 60% indigenisation in 25 years. Government auditors recently sought an explanation from BEML on the tardy progress.

VRS Natarajan, BEML chairman and MD, said indigenisation had reached 60%. But he claimed the process had picked up pace in line with the agreement. “When I joined in 2002, indigenisation was at 21%,” he said.

“Within eight years we have reached 60% without paying a penny for technology transfer. With another order we’ll hit 70%.” BEML has rolled out 6,000 Tatra trucks till date.

In 2005, a BEML press statement said the company, which has mini-ratna status, had achieved 44% indigenisation in the manufacture of Tatra 8x8 trucks and once the engine, which was undergoing trials, was commissioned, the percentage would rise to 58.46. In the Tatra 6x6, 41.26% of the components and aggregates had been indigenised.

According to a 2005 public-interest petition in the Karnataka HC, the BEML chairman had written a letter highlighting the lukewarm response of Tatra Sipox (UK) Ltd in supplying documents and transfer of technology.

BEML had started the indigenisation programme after the first agreement was signed in 1986. Under that agreement, the licensor, Omnipol, was to furnish all assembly and production drawings of Tatra 8x8 and 6x6 trucks for Rs3 crore by March 1997.

A similar 10-year clause was put in the agreement with Tatra Sipox (UK) Ltd signed that year. Yet, the indigenisation programme remains incomplete.