That a country, which has successfully accomplished a lunar mission and emerged as a global software and IT hub but continues to meet around 70 percent of its defence requirements through imports can hardly lay claim to the status of a military power of global standing. The very fact that India is today the world’s largest arms importer calls for a serious rethink of India’s arms production and defence acquisition strategy. Clearly, the current level of Indian self reliance in defence production, which is far below the capabilities of the country, needs to be boosted through qualitative and quantitative transformation of India’s defence industrial base. Of course, Indian Defence Minister A.K. Antony has been persistently advocating the need for India to end its unchecked dependence on the imported military hardware through the path of self- reliance in all aspects of defence research, technology and production. As it is, India’s defence hardware acquisition strategy based on imports has proved to be a costly, time consuming and troublesome exercise. Added to that the murky role of shadowy middlemen, around whom the tales of kickbacks and bribes revolve, have turned Indian defence acquisition process into a far from transparent business. Indeed, the stigma of bribery associated with the Bofors deal, which had stirred a severe political storm in the country in 1980s, continues to cast its dark shadow over India’s defence acquisition programme with serious consequences for the combat readiness and fighting fitness of the Indian defence forces. In particular, the spectre of Bofors continues to haunt Indian army’s multibillion dollar artillery modernisation programme.

From the word go, nothing seems to be right with the strategy of relying on large scale imports to equip the Indian defence forces. To begin with, many of the imported defence equipment are far from suitable for operations under the climatic and environmental conditions under which Indian defence forces operate. A case in point is the failure of the thermal control system of the Russian battle tanks while on trials in the desert stretches of Rajasthan. Secondly, the defence procurements from overseas sources have somehow come to be associated with “wrong doings and impropriety” not to speak of more than the normal price India is forced to pay for the imported hardware.

To make the matter worse, three countries-USA, Russia, and Israel—which account for most of the India’s defence imports-- have been blackmailing India in their own way. US defence and high tech import always carries the possibility of sanctions and technology denial in addition to a variety of irritating and vexatious conditionalities. India simply cannot afford to forget how USA tried to arm twist the country in the aftermath of 1998 Pokhran nuclear blasts by imposing technology embargo on a number of Indian defence, scientific research and industrial entities. And there is absolutely no guarantee that USA will not coerce India-- which is now third in the list of top ten arms importers from USA—in the future by invoking sanctions that could jeopardise the supply of spares and maintenance for US origin fighting equipment in service with the Indian defence forces.

As for Russia, it is by no means a better defence partner than USA. Russia seems to have fine tuned the art of abruptly escalating the cost of defence projects mid- way through the course of their implementation. How Russia managed to extract a “heavy price’ for retrofitting the decommissioned aircraft carrier Admiral Gorskhkov renamed INS Vikrmaditya is a clear pointer to the pitfalls of “defence import”. Cost escalation, undue delay, poor performance and unreliable spares supply are some of the problems associated with the defence hardware of Russian origin. Israel, which in recent years has emerged as a major arms supplier to India, is now known to be passing on “overpriced products”. It is not for nothing that Defence Minister Mr. Antony has time and again voiced his concern over the “hidden costs and cost overruns” involved in imported defence hardware. He has also expressed the view that “India must not allow its defence acquisition procedures to be manipulated or corrupted.”

There is no denying the fact that Indo-Israeli defence deals have become conspicuous for the unprecedented levels of secrecy and lack of transparency over the details of the cost involved. Sometime back, the Indian Defence Ministry did admit that some Israeli defence companies committed irregularities. The moral of the story is that India should become self reliant and self sufficient in meeting the needs of its defence forces. Self reliance holds the key to India’s transformation into a major military power. That India’s home-grown Arjun Main Battle Tank (MBT) proved to be a better performer than Russian-T-90 in comparative trials carried out in Pokhran range could be a major driver for pushing ahead with self reliance in the defence sector of the country.

Perhaps a synergy of private-public sector industrial enterprise in India that is finely tuned to meet the stringent needs of Indian armed forces in a “timely and cost effective fashion” could prove a win-win strategy to create a robust Indian military industrial complex capable of ending India’s pathetic dependence on imported defence equipment. While addressing an international seminar on defence acquisition organised by the Institute for Defence Studies and Analysis (IDSA) in New Delhi in July last, Antony had pointed out that the primary objective Indian defence production system must be “to stay competitive and yet remain cost efficient as well as technologically and strategically reliable”. According to Antony, for this to happen defence industrialisation will have to be accelerated with the public sector playing a bigger role in collaboration with the private sector. However, lack of foresight and proper policy planning has led to the Government being forced to put on hold the take off of India’s first ever public private joint venture between the state owned Mazagaon Dock Limited and Pipavav Shipyard Limited.

The need of the hour is to strengthen India’s defence production system composed of 40 ordnance factories, eight public sector defence enterprises and 50 laboratories under Defence Research and Development Organisation (DRDO) by drawing on the expertise of private sector players. Indeed, private sector outfits including Mahindra Defence Systems, Tata Advanced Systems Limited, Pipavav Shipyard and Larsen and Toubro have all made it clear that they are ready to take up the challenges of Indian defence production. But all said and done, Indian industry, both the state owned and privately controlled, would need to refine its capabilities and upgrade skills to gear up for providing life cycle product support and plan for future upgrades. The reason why Indian aeronautical major HAL (Hindustan Aeronautics Limited) could not do for the Indian aeronautical sector what Embracer did to Brazilian aeronautical sector is not difficult to fathom. For the innovative and creative spirit of HAL was killed by an undue preference for license production. Of course, HAL has now initiated work on a number of home-grown aeronautical projects.

Antony’s vision of self reliance, focuses on a production policy that will eventually strengthen defence industrial base in both public and private sector. But for this vision to fructify, the private industrial sector should invest more on research and development to innovate state of the art systems to boost the fighting edge of the Indian defence forces. Of course, in this context, there should be a clear cut policy framework for “supporting and handholding” private industrial entities till such time as they become commercially sustainable ventures. Perhaps Indian Defence Ministry can take a leaf out of the mechanism perfected by ISRO to source components, hardware and subsystems for its launch vehicles and satellites from the Indian industrial units, both in private and public sector. “We believe equipment modernization plans of the armed forces would result in the development of an active, thriving private sector defence equipment and systems manufacturing industry,” says Sudhir Variyar, Investment Director at Multiple Alternate Asset Management.

On his part, Antony is of the view that Indian defence forces should be given a “bouquet of choices” to pick the best from the available technologies to meet their requirements. Against this backdrop, a vital electronic warfare (EW) system for Indian army’s mechanised corps will be categorized as “Buy Indian” instead of blindly handing it over on a platter to the state owned PSUs. This implies that the “Buy Indian” would enable a range of Indian companies to bid for the estimated Rs.1800 crore contract to develop a “Track and Wheel based Electronics Warfare System (TWBEWS).” Indeed, the over pampered state owned defence enterprises, not accustomed to the culture of competition, and should strive to spruce up their work culture and production ethos to take on the challenges from the private sector. Indian Defence Ministry has already conceded that the country’s defence public sector shipyards have lost out to the private players on the construction of a number of naval vessels in recent times. And the prevailing mindset that Indian private sector can only complement public sector and not compete with it does not augur well for the growth of Indian defence production sector. For in the race to acquire self reliance, expertise, facilities and human resources available in the country--cutting across the barriers of public and private sectors-- should be harnessed in a synergetic fashion with a “focussed vision”.

But then whether the offset policy forming part of the Indian defence acquisition programme would benefit Indian industry to acquire new technological skills and innovative manufacturing expertise remains a debatable issues. The current offset policy mandates that any foreign acquisition of defence hardware worth more than Rs.300 crore should be followed by the investment of minimum 30 percent of the total contract in India by way of outsourcing components and hardware, manufacturing as well as technology transfer. Incidentally, Indian SMEs (Small and Medium Enterprises) have built up an appreciable level of expertise in areas such as aero structures, landing gear, brakes and wheels, avionics and electronics as well as IT based design and analysis. With India expected to shell down over US$100-billion on defence acquisition over the next one decade, it is estimated that the offset would be worth more than US$30-billion. But then a section of defence industry analysts believe that in the absence of stringent monitoring and well defined guidelines, vendors will always find ways and means to escape the offset obligation.

Further, there is also an apprehension that the recent decision to expand the scope of offset obligations to include civil aviation and homeland security sectors could lead to the transfer of technologies lacking in “cutting edge”. All said and done, the overwhelming view is that in a best case scenario offset obligations will bring some temporary benefits and will not be a prescription for critical capacity building of Indian industries. As such the suggestion is that vendors should be encouraged to choose India as a hub of defence production that could derive strategic advantages from the lower labour cost and abundantly available talent pool. This strategy could ultimately lay the foundation for a thriving export oriented defence industry. And India could very well look at graduating into an exporter of defence hardware from its current position of being an importer. In so far as exports of arms and ammunitions are concerned, India seems to be lagging behind even Pakistan. It is high time that DRDO chose to set up a commercial arm patterned after Antrix Corp floated by Indian Space Research Organisation (ISRO) with a view to market the spin off technologies and boost the export of defence products. Rama Rao Committee formed for restructuring of DRDO had also suggested creation of the Commercial Arm of DRDO. It is believed that so far only a note for approval of Cabinet has been initiated. Parliament’s Standing Committee on Defence has also been recommending increase of the R & D budget for the DRDO from the present level of around 6 percent of the defence budget. But wheels of bureaucracy move very slowly, especially so, in India. All said and done, India’s journey to defence reliance is not going to be easy or quick.

But a worrisome aspect of the Indian defence sector is that much of the research and development activities are spearheaded by the institutions and organisations run on public funds with the private enterprises showing very little interest in investing on the original research and development activities. This anomaly needs to be set right for making India self -reliant in weapons manufacturing and defence technology. Antony has been repeatedly impleading with the private Indian enterprises to invest a part of their profit in research and development and stay competitive.

Yet another negative feature is the glaring mismatch and lack of coordination between the Indian defence forces, DRDO and production agencies. This, has in fact, proved to be a major hindrance in attaining self reliance in defence production. The failure to involve the end users—defence forces—from the word go meant rejection of many of the products developed by DRDO. Of course, this trend is slowly changing for better with the defence forces accepting Arjun Battle Tank and Akash surface to air missile-- that were not long back found deficient—after DRDO improved their performance following feedbacks from the users. In order to ensure a greater coordination and cooperation among the stakeholders in defence production, the Ministry of Dfence had accepted the recommendations of Rama Rao Committee to set up Defence Technology Commission (DTC) on the lines of the highly successful Space Commission but again only a note for its approval by the Cabinet has been initiated.

While DRDO should strive to speed up the delivery of products through an enhanced participation of the Indian industry, the defence forces should be patient enough to provide feedbacks to help DRDO improve the performance of products. “There is no point just reforming DRDO, it is the entire defence system that needs reforms,” says a defence personal familiar with the Indian defence production scenario. The view of the defence forces is that they are forced to go in for imports in the wake of delays on the part of DRDO to deliver. But then DRDO chief V.K. Saraswat drives home the point that “services must understand that while the temptation may be overwhelming to filed proven state of the art imported systems, they too have a role to play in the country’s economic and industrial growth”. As such, DRDO and defence forces should move to a common, middle ground in quest of self reliance in defence production.

This is an area where India can perhaps take a leaf out of Chinese experience. For in China military is allowed a central role in overseeing the defence production. Not surprisingly then, innovation insisted upon by the defence forces, has become a strong element of the Chinese defence production sector. As pointed out by Tai Ming Cheung, a Chinese speaking Professor working for Pentagon’s Minerva project “Until the late 1990s, the Chinese approach to defence technology and research was in a much worse state than what India is in today. They have been able to deal with a lot of these issues in the last one decade alone”. To infuse innovation and quality in the Indian defence production sector, the military should work in close rapport with DRDO and manufacturing agencies right from the scratch and help improve the performance of the product through proper feedbacks.

Rightly and appropriately, DRDO is now veering round the view that it needs a massive backing of India’s public and private sector industries to “deliver on time”. Sometime back, P. Venugopalan, Director of the Hyderabad based Defence Research and Development Laboratory (DRDL) had told leading Indian daily newspapers that “We want more agencies in India to absorb the technologies and produce the missiles in large numbers. Private industry should come into missile technologies in a big way. The success of Akash missile is a classic example of private sector participation”. The projection of DRDO is that over the next one decade, more than 10,000 tactical missiles need to be produced at a cost of Rs.80,000 crore.

The biggest stumbling block towards attaining self reliance in all aspects of defence research, technology development and production is sluggishness and a lack of proper understanding of the issue on the part of bureaucrats associated with the decision making process of Indian Ministry of Defence. For only a familiarity of the challenging conditions under which the defence forces are required to operate and fight could bring about a change in the perception of the bureaucratic strand of the Indian Defence Ministry. Speed, vision and seriousness should be the guiding mantra of India in its quest for self reliance in all aspects of defence production.

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Published Date : 30^th December 2011