SSS Defence, a Bengaluru-based defence start-up has designed and developed India's first indigenous Sniper platforms giving a boost to the government's Make in India programme.
CNBCTV18.com spoke to SSS Defence's chief executive officer (CEO) Vivek Krishnan on a raft of issues ranging from the inspiration behind the company to business challenges in front of a start-up working in a sector dominated by state-owned and foreign companies. Krishnan also dwells at length about the vision and growth strategy going ahead. Here are the edited excerpts from the interview with Vivek Krishnan: Q: Tell us about your company and the idea behind SSS Defence?
SSS Defence was founded as a sort of "Skunkworks" project to foster innovation and entrepreneurship within a big company environment. The parent of SSS Defence is Stumpp Schuele & Somappa Springs Pvt Ltd, which is the largest manufacturer of springs in India for both automotive as well as defence sectors. So the company has actually been a tier-I supplier to the defence public sector undertakings for a long time. The SSS Springs is a family owned business. Around 3.5 years ago, Satish Machani, who is the promoter of SSS Springs, and few of us met and discussed how to move forward as a pure tier-I supplier. At that time we looked at ammunition as a diversification strategy. In ammunition, if you have a better understanding of the weapon, the better your understanding of the ammunition will be and the better your overall performance. So we also decided to foray into the small arms space.
Q. Why start on your own and not partner with a foreign firm with the option of transfer of technology?
We did indeed explore collaborations to seek technology transfer for small arms, early in our growth stage. However, the level of indigenous production that we wanted to undertake was always going to face limitations on account of ITAR. The ITAR is a regulatory regime that strictly enforces controls on technology transfers in the area of defence products and indeed is meant to both support and protect foreign (primarily US) OEMs. It was a decision that we took thereafter to grow organically and create our own Intellectual Property for small arms design. We had to invest in R&D upfront but it would prove to be a positive as we now can call ourselves an OEM with home grown products to showcase. It also gives the country an edge in the long run and opens up markets for export. If we were subject to restrictions under technology transfer pacts, such flexibility would not be forthcoming.
Q. Where does SSS Defence fits in the defence manufacturing ecosystem? What is your design philosophy?
Our product design and manufacturing philosophy is different from some existing defence manufacturers in our space in that we are not assembling foreign made parts in India for a weapon to qualify for "Make in India" criteria. We are also not waiting to qualify for an RFP with a weapon and neither are we waiting for a contract from the government to invest in facilities and move ahead. We work differently and organically try to learn what exactly the forces require, what exactly they were trying to accomplish in certain mission environments, how exactly they were being constrained by the existing crop of ammunition and also small arms. It allows us to create weapons with certain attributes which I believe foreign weapons do lack.
Q. You have the licence for both small arms and ammunition as well as a JV with a Brazilian firm? How does it fit with Make in India?
I firmly believe that Make in India for defence is being looked at very seriously. We have the industrial license today, to manufacture both small arms and ammunition in India. We plan to be the only Indian private sector company to have operations commencing in both areas by the end of this year. The SSS Defence small arms unit will shortly be starting operations in Bengaluru and the ammunition plant will commence in 2021 from Anantapur in Andhra Pradesh. For ammunition production, we are working on a joint venture with Companhis Brasileira de Cartuchos (CBC), the world's second largest ammunition producer with a presence in over 130 countries. We have been collaborating on many technical fronts with CBC for the better part of the past two years and there is a lot of indigenisation we are trying to accomplish in this arena.
Q: You have developed two prototypes of sniper rifles without foreign involvement. Is it completely indigenously built?
The entire design of the rifle is Indian. We have applied a lot of cross functional disciplines – chemical engineering in coatings, metallurgy, industrial design, anthropometrics, aerospace engineering in the process of design and testing. The entire rifle will be manufactured in India as well. We are presently working on also putting up a barrel manufacturing set up for precision rifles and hope to be self-sufficient in terms of 100 percent of manufacturing cost and content by 2022.
Q: How much competition do you face or will face from any other private sector player?
Yes. We do foresee competition. However, to us the single largest block of competitors will be foreign OEMs with decades of experience to boot. Of course, we also expect Indian firms to bring in foreign transfer of technology in the area and assemble in the country. However, we can state that to the best of our knowledge no private sector entity has so far developed an Indian designed sniper weapon that functions to global performance benchmarks like that of the US SOCOM. Our intention in the short term is to sell to the World and not be restricted by geography.
Q: How India buys small arms for its forces and what is the usual order size? Do you think your company has the capacity to fulfil large orders?
The small arms and ammunition manufacturing segment had very few licenses issued until 2016. Among the early entrants was Punj Lloyd that had a JV with Israel Weapon Industries (IWI), which is the largest armament manufacturing firm in Israel. So far the large orders have gone mostly to the PSU defence firms and DRDO. And more importantly, they have internal testing facility for weapons and no shortage of ammunition, which we don’t have. We cannot be totally dependent on the Indian forces to buy our product so our business plan also hinges on exports. While for long when almost all bids were purely global bids, today we are seeing more Make in India bids. In some cases we are only seeing make in India bids where there is no buying portion at all.
We are starting to see much more support coming in from the government saying that we would like you to export to as many nations as possible, not only the nations that have long term strategic and defence ties with India but also in specific instances with established markets in Asia and Latin America.
I support it and I believe in it. But I also believe there are still going to be shortcomings as this is a longer term process. So on one side there is going to be burden of proof on the private manufacturers to ensure that what you are actually putting forward as a product matches up to global quality and on that I have no doubts. The forces and the Ministry of Defence should develop umbrella programs where Indian firms that have actual IP and products that are compliant with their Qualitative Requirements (QR) are given the first preference to sell to users. Thereafter the same programs should ensure that the products are refined to encompass multiple variants and upgrades. This is a soft of co-development process that the US via DARPA and SOCOM for example does very well.
Q: You said that you fully believe in governments ‘Make in India’ program.