Issue Vol 25.4 Oct-Dec 2010 | Date : 09 Jan , 2013
Someone recently observed that “doing serious defence business in India is like religion; it’s an act of faith”. A droll statement but the point was a serious one. A corporation assesses the potential risks and rewards in entering a market and then judges whether or not it is in the best interests of its principals to do so. This decision is the expression of rational business confidence.
However if a corporation cannot adequately assess risk and reward, it has no rational basis upon which to proceed. Under such circumstances, to proceed is to gamble; there is no rational business confidence as such, merely an act of faith.
The Indian MOD may soon find itself caught in an unpleasant pincer movement… serial blacklisting is steadily shrinking the size of the competitor pool.
Unfortunately, many defence corporations have entered the Indian market as an act of faith rather than of rational judgment. Their action is based on one core fact; the market is big and demand is real. However, they consider the nature of the defence procurement process to be (in the greater sense) that of a lottery. As Vulcan was recently told “anything can happen, at any time, for no apparent rational reason”.
To put it crudely, the view in the foreign boardroom is that ‘India is highly uncertain but too big to ignore’. Even so, the decision to enter the market remains an act of faith: the unquantifiable hope that the Government of India will not permit the issues of a troubled procurement process to compromise the greater National Interest.