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British defence industry body ADS Group downs shutters in India

The UK government will continue its support, though, with defence products ranking amongst Britain's top three exports

Ajai Shukla  |  New Delhi 

defence, bae systems
A replica of a Lightning fighter jet outside the main gate of the BAE Systems facility at Salmesbury, England. After March 31, only large British manufacturers such as BAE Systems will retain presence in India. Photo: REUTERS

Even as New Delhi and London talk up the importance of their “strategic partnership” and exchange top-level political visits, the UK industry is thinning out from India. Business Standard learns UK industry body (the acronym encompasses “aerospace, defence, security and space”), which represents over a 1,000 firms, is shutting down its India office from March 31. Since 2002, when opened an office in New Delhi, it has been only its second foreign station after Toulouse, France. In 2009, opened another office in Bengaluru. “With its massive budget, a booming civil and military aviation market, and ambitious homeland security plans, India is a country one cannot afford to miss,” says the company websight even today. That enthusiasm has dramatically waned. While no public announcement has yet been made, member companies have been informed about the closure of the India office. So have Indian companies that joined the British industry body, hoping that would help them connect with small, UK-based, high technology companies, which they could potentially ally with or even buy out. One of those Indian members was the Pune-based Kalyani Group, which confirms its membership lapsed as it became evident that was pulling down the shutters in India. After March 31, only a handful of large British manufacturers will retain a presence in India — large firms like BAE Systems, and Cobham, which do enough business in India to justify maintaining company offices. The UK government will continue its support, though, with products ranking amongst Britain’s top three exports. This would be done through the UK Department of International Trade, which operates from the British High Commission in Delhi. Even though India remains the world’s largest arms importer, much of New Delhi’s capital spending goes on government to government buys, or single vendor procurements from global giants. “Make in India”, which is what small British technology firms would gain business from, has always lagged the rhetoric, even after 2014, when the National Democratic Alliance (NDA) government portrayed manufacture as a key driver of its “Make in India” initiative. It is understood that Paul Everitt, who heads ADS Group, has concluded that India is a difficult market that does not warrant the expense of a full-time office and staff. Asked why it was closing its India office, did not furnish a response. industry analyst, Major Karun Khanna (retired), points out that most of the UK industry consists of two big primes — and — which have own India offices.

With large US and French corporations buying into British firms in recent years, there is simply not enough of UK industry left to justify representation in India. Other industry analysts argue the high cost of British products is forcing its industry towards the exits. In contrast, US, Israeli and French firms are enlarging their presence in India, having developed low-cost production models that operate on wafer-thin margins. In contrast to the bleak industry picture, India-UK political engagement is vibrant. Prime Minister Narendra Modi visited the UK in November 2015, which was reciprocated by his counterpart, Theresa May, a year later. Minister Nirmala Sitharaman was to visit the UK this week, which was postponed after the terrorist attack in Jammu last week. The British and Indian militaries do joint training together. Officers train at each others’ establishments. A “Consultative Group Meeting” is held each year at the secretary level. Intelligence exchanges are robust. The next opportunity for interaction would be the Defexpo India 2018 in Chennai in April, which the UK minister for production is likely to attend.

First Published: Wed, February 21 2018. 01:40 IST