Beyond the COVID-19: Indian Defence Industry

The social media is bulging at seams in making unending predictions by the hour related to the ‘life after Covid’. The continuum ranges from a ‘total doomsday’ scenario painted by the naysayersto the ‘we will win’ and how the life will be better after ‘the Great Realisation 2020¹ by the ‘never say die’ brigade. A sample of the abiding flavour:-

1. ‘Covid-19 will be a game changer at the global level; its spiralling adverse effects, though not visible fully as yet, will be total
   gigantic².
2. The adverse effects this global calamity will be felt on every facet of human existence be it economy, health, businesses, global trade, international relations, geopolitics and more, for a very long time in the future.
3. The economic impact of the pandemic in inflicting global recession and losses will be much more severe than Severe Acute Respiratory Syndrome (SARS) virus that appeared in China in 2002 or the Middle East Respiratory Syndrome Corona Virus (MERS CoV) that was identified in Saudi Arabia in 2012³.

While the above list can continue with one fact grimmer than its predecessor, this article tries to look at the limited picture of the likely impact of the pandemic on the Indian defence industry and how will it be on the ‘day after’.

The article distances itself from the global perception of wars, which, experts opine could, and have become uglier with new tools of achieving ‘bloodless victories’ through silent and deadly killers that decimate peoples by whole communities, and by implication, destroy economies, health , administrative backbone, banking, healthcare and more.

It simply tries to look at ‘what is’ and ‘what it is likely’ in the Indo-Pak-China matrix and not China-world matrix.

The Belief: Why Guns when Virus can?

With a total death count worldwide on 02 May 2020 standing at a staggering 239711 and moving northwards (data captured from 22 Jan 2020 to 27 Apr 2020)⁵ leaving economies, jobs, heath care and the social fibre of the world in disarray, a strong belief doing the rounds is ‘why guns when virus can’. A view point on this thought is presented:-

1. There is no doubt that Covid-19 has shown what a ‘germ attack’ can do. The world ‘attack’ has been used with deliberation and in recognition of the open source claims that the virus was artificially made, though there are more number of voices that say that the disastrous gene had natural origins⁵.
2. In another variation of views, there are claims that China lied about the outbreak of corona virus pandemic. In that, the critical time lost by the world in putting up the guard led to its deadly global spread (hence the blame). Also, there are voices to ‘Stop Communist China’ from gaining influence in America and around the world⁶.

   This issue of allegations and denials is not carried any further except for the recognition of the fact that, a virus attack/pandemic of this magnitude if leashed on humanity can actually inflict a global disaster of unimaginable magnitude.

3. Back to the question, why guns when virus can? The follow up questions are:-
1. Is it to be inferred that such virus attacks (if it was an attack) can be the tools of waging inter-state conflicts?
2. Will the above pattern of waging ‘virus war’ become the pattern in the Indo-Pak, Indo-China or Indo- Pak+ China scenario?
3. Will the ‘germ warfare’ in times to come going to become an option of first recourse ahead of the erstwhile conventional means (and the unconventional in their value counted in deterrence terms)?
4. In response, to the above posers , following points are made:-
1. Today is an era of hybrid wars where, technology-driven conventional warfare on land, sea, air and space is blended together with irregular and unconventional warfare embracing multiple domains like information warfare, cyber warfare, fake-news and disinformation warfare, economic manipulations, proxy wars, insurgencies, diplomatic warfare and more. The latter kind of wars aiming to achieve the desired national interest without engaging in open military hostilities.
2. Apart from the above stand three (in fact four) other pillars namely nuclear, biological, chemical and radiological (CBRN) stand in the unconventional domain as weapons of mass destruction. That said, the actual potential and use of these pillars of waging conflict, is actually counted in terms of their deterrent value.
3. It is just that the ‘B’ of the CBRN quad has recently shown its devastating potential; either of its own volition or inflicted upon mankind. Nothing more nothing less.

Looking at the End of Covid-19

Recently the Singapore University of Technology and Design has carried out a data-driven prediction on the likely inflection point and time-linked end-phase of the current pandemic. The prediction has been based on a detailed life-cycle study of the virus (initial acceleration-inflection-deceleration-end point) against the specific state-of-affairs in each country. The summary of its results as related to our immediate neighbourhood is tabulated⁷:-

While the above table is presented for whatever it is worth following points are clear:-

1. Most of the above predictions are based on a huge number of assumptions and extrapolations into the future. Many (or a majority) of which may actually prove to beuntrue as the world moves ahead and many other facts present themselves which the Study never thought.
2. These are dates, driven by an an arithmetical formulation, it is without the catastrophic and crippling effects on the nation states in terms of economy, human lives, health, work loss etc.; in fact the very fibre of the human existence. These effects may far outstrip the above end-state predictions.

Whatever dates the Covid-19 ends, some facts are clear in the Indo-Pakistan-China scenario:-

1. As regards the biological weapons (R&D, renewed development etc.) it is likely to be just the same as pre-Covid-19. Nothing is likely to change at least outwardly. The stakeholders are bound by international treaties:-
1. China, Pakistan and India are signatories to the Biological and Toxin Weapons Convention (BTWC) that prohibits the development, production and stockpiling of biological and toxin weapons.
2. Biological weapons are likely to have little relevance in the Indo-Pak- China scenario keeping in mind the following:-
1. The effect of the weapon is likely to infect both sides looking at the borders that segregate each country over a contiguous land mass.
2. The type of effect and the timeframe of the biological weapons taking full-bloom effect will not be the type of time frame envisaged in the nature of short and intense wars ( if at all) in our scenario.
3. In the fairly long drawn run-cycle producing incremental results on a rather flat time curve will not provide the cutting edge victor-vanquished equations as can be envisaged during conventional wars.
4. Warfare in this domain will therefore remain another soft-kill tool (rather muted) in the armoury of hybrid war arsenal.
2. With the above assumptions as given, what it will be for the war with conventional means, post the pandemic. Some points:-
1. Except for significantly deep economic fissures (dealt later), much on the conventional war front will get back to ‘business as before’ stance sooner than later.
2. The economic fissures will indeed be deep and back-breaking as the country will divert major financial packages towards sustenance of human life, healthcare, medicines, sustaining the unorganised sector and helping it to bounce back through hand-holding, reviving the social sector, doling out financial packages to save industries especially the Micro Small and Medium Enterprises (MSMEs), making up for crop losses, providing packages for farmers and agricultural sector, compensating the States for the losses sustained by them during the lockout period etc.
3. All the above and more will be in addition to the constant fund flow required for long term fight against the pandemic i.e. testing, protective gears, medicines/vaccine and hospitals etc.
4. Keeping all the above in view, it will be a fair guess to say that the overall defence budget is likely to be poised for a 50% flat cut starting with immediate effect and a similar (or a little less) cut in the next financial year. Also, it is expected that the cut can only be eased out in the next two to three years in a phased manner, if the steady-state holds.
3. With the above as given what will be the face of reality in the Indian defence industry in the foreseeable future? Some points:-
1. As the funds dry up fast, the axe will fall on both the public as well as private sector but the impact will be quite different on each.
2. Secure in its existence, the public sector will face a major crunch in a squeeze on the working capital and a reduction in the future fund flow. This probably will take effect in extension of the time frame for the ongoing deliveries and a curb on future developments besides probably a lesser allocation on future R&D.
3. The challenges for the private sector will be far too severe. For instance, on the other side of the pandemic, many a MSMEs, in the defence business would have either wound up shop or changed their business vertical to something that will keep them afloat in an existential crises (ventilators, personal protection equipment, masks and the like).
4. As per the latest open source report, some 19-43% of all the 69 million MSMEs may disappear if the lockdown persists for 4 or 8 weeks more⁸.
5. In fact, there is an immediate need for the Govt for announcing a relief package for the MSMEs to keep them in existence in these challenging times. As of Nov 2019, there were an estimated 8643 MSMEs in the domestic defence manufacturing and production sector alone. These will have to be sustained to fight another day.
6. While the Govt has announced a package of 1.7 lakh crores for the industry (and a second one is on the anvil besides major concessions in GST payments etc.), the challenges for the defence private sector are very peculiar and grave in nature.
7. In fact, it was only about a year or year and a half in the past when the defence private sector had started to see some initial successes (L&T - K 9 Vajra, Mahindra defence -M 777, TATA Power SED – 3D radars for Navy howitzer, Bharat forge, Punjloyd, Tatas, Mahindras - ATAGS, Adani defence – UAS….⁹).
8. The irony is that even when all the above was happening, the experts’ feeling in the private defence sector was that there were hardly any orders on the table. This situation will become worse for the private sector both from the domestic as well as the international market.
9. Talking of international market, the defence exports will also take a big hit as potential buyers will shy away because of resource crunch and the existing ones may delay receipts due to liquidity issues.
10. In addition, there will be problems that lie on the common denominator such as lesser work force due to inevitable layoffs, shrunk working capital, fixed costs, financial challenge to sustain existing work force with nil/minimal work/orders at hand, challenges to meet contractual liabilities and more.
11. The Govt will have to pitch in doing the hand-holding of the private sector. Some action points:-
1. Make II projects, especially of the category where MSMEs has the first right of refusal and which have gone past the acceptance of necessity (AoN) stage must not be cancelled/postponed for want of funds. These were thought through earlier and today mean an existential dose for the MSMEs.
2. While very inadequate funds are likely to be left after paying out the contractual liabilities, these must get translated into orders both for the private, as well as, the public sector and not be skewed in favour of the latter.
3. Besides the bailout already planned and given, the Govt must be ready with successive bail out plans especially for the MSMEs. The aim should be to reverse the ‘shutting shop’ percentage that is currently threatening to be 19-43%. How thinly it attacks the 8346 defence MSMEs is the challenge to faced by the Ministry of Defence (MoD).

On the Other Side of Fence

With all the above said for the industry and more, what is in store for the Services post the pandemic shadow? A viewpoint is presented:-

1. Drastic cuts in the defence budgets (50% or thereabout) is likely to be a reality that will impact the Services in a big way.
2. That said, nearly the same situation is likely to prevail across our potential adversaries (much worse than us with the western neighbour and many shades better than us on the North). What does that mean? Probably the following:-
1. The threat levels on land, sea and air are likely to hold for quite some time in the future. There is unlikely to be a major weapon induction/import while the ones in the pipeline will have the ‘Covid-19 deceleration’ effect arising out of many factors- payment crises, inability of OEMs to hold delivery deadlines, work force nightmares and more.
2. Stake holders across borders will try to switch on to ‘sustenance’ mode with a bid to maintain status quo ante.
3. What sustenance mode will mean in our scenario? Essentially the following:-
1. Be prepared to face an eventuality (armed conflict) with ‘what is’. (It is an irony, though not at all surprising that even in the peak days of Covid-19 scare; there is constant and relentless firing from across the western border. Of course that is driven by some other compulsion that is NOT Covid-19 related; the compulsion to push maximum miscreants across while passes remain open or the country is looking inwards at the pandemic).
2. The implication of ‘what is’ demands that the most critical and urgent needs are addressed in priority over others. The peculiar thing about defence procurement is that it is not a typical buy-sell transaction which can be altered or changed at will in a short time frame. Procurement processes stretch to many years from formulating the GSQR to taking deliveries. Once a process is set into motion, it rolls its cycle which may extend from 4-8 years. Such a cycle when in motion at its own slow pace is not tuned to taking sudden changes.
3. In this scenario, what can possibly be done ( and must already be in progress)is to re-prioritise some ongoing procurements over the others in allocation of funds, or for making some urgent purchases across the counter to plug some gaping voids.
4. With the above in mind, some overriding priorities at this point of time could be as under:-
1. Keeping critical ammunition above Minimum Acceptable Risk Level (MARL). While the War Wastage Reserves (WWR) scales of ammunition caters for fighting a 40-days war with intense (I) rate of expenditure, MARL is for 20 days (I). While ammunition procurement is a very long cycle driven by expert inputs, the same may have to be tweaked a bit, given the current scenario.
2. Of critical importance are the tank ammunition, small arms ammunition, anti-tank missiles, 155mm gun ammunition, air defence gun ammunition and SAMs etc. Similarly, critical ammunition requirement of other two Services needs to be taken into account.
3. Making up those specific deficiencies in all arms and services which were identified in the latest wargames and exercises with Integrated Battle Groups (IBGs) on the western and northern borders.
4. While allocation to some big ticket items could wait, a ‘short fuse’ list needs to be prepared covering the most critical requirements of the Services. Such a list will help identifying what needs to be re-prioritised.
5. It is neither possible nor intended to draw out any list here. Basically the wherewithal to fight with ‘what is’ if the unlikely scenario of doing the same does manage to unfold… - unmanned systems, equipment gaps in ensuring net-centric communications, critical engineer voids, critical wherewithal to sustain counter insurgency operations, supply chains. This can go on…
6. With CDS in place, it may be possible to arrive at the ‘most critical’ for the three Services on a common platform; turf wars notwithstanding (very tall order).
4. While re-prioritisation of the current essential procurements is one thing, equally important will be the need to have a re-look at the need for quality training under minimal resources. This is stated with a belief that a major axe will fall on training expenditure which will bear the brunt of huge and unforgiving cuts.
5. While the ammunition will always remain critical and its costs are sky-rocketing, the way out will be a much greater dependence on simulators for training.
6. Fortunately, the country has come a long way in achieving a class and a kind of maturity when it comes to simulators. Making use of thestate-of-the-art technology and employing the enabling tools of IT and ITeS, virtual reality, artificial intelligence, deep machine learning and more, today’s simulators can create a world of their own. A sample:-
1. Contemporary simulators cover a whole continuum from Live Fire, Virtual Simulation, and Live Force-on-Force to Constructive Simulation techniques.
2. Live fire simulators provide opportunity to carry out live fire training using smart ranges and smart targets that cut out the time and cost of training drastically besides providing accurate and quantified results in real time.

Also, such simulators provide tailor-made spaces such as Shoot Houses or Container-Based Live Fire Ranges etc. which can be used for specialised training such as for CI operations or training for those troops that cannot be pulled out from duty to proceed to field firing ranges.

3. Virtual simulators, made specifically for various weapon platforms provide the live-fire effect complete with recoil, shock, jerk, platform vibration, smoke, flash etc. as akin to the firing actual weapon but with ZERO expenditure on ammunition.
4. Force-on-Force simulators provide opportunity for carrying out two-way opposed training in realistic battlefield and environment conditions, all simulated to real-life experience.
5. Constructive simulation refers to a whole set of war gaming solutions.
7. But with such deep cuts as are envisaged where will be the funds to make a significant shift to simulator based training? In fact to make any tangible difference, significant investments will have to be made to procure a large range and depth of simulators. Funds will be an issue, besides the essential lead time running into years in making successful procurement happen as per the laid down chains of approvals.
8. One way out of the above is to ask the simulator vendors to provide ‘simulator-based training as a Service’. In this, the vendor puts up ‘simulator parks’ populated by a range of simulators required, say for a particular formation.
9. The vendor operates these parks on a Build-Operate-Maintain (BOM) model and offers to carry out training (conducted by Service experts) as a Service.
10. Payment for the training is done to the vendor on a mutually agreed arrangement which could be costs per individual per quarter or in a training cycle/training year etc. The cost liabilities are split and phased, making them manageable.

In the prevailing Covid-19 environment, the moot question – ‘what next for the Indian defence industry and the Services per se’ can hardly be heard. This was an attempt to make it audible and present a viewpoint on the same.

End Notes

1. “The Great Realisation,” www.youtube.com [3]. Accessed on 02 May 2020
2. “Is Covid 1-19 a Geopolitical Game-Changer?, at www.institutmontaigne.org [4]. Accessed on 22 Apr2020
3. “How do SARS and MERS compare with Covid 19,” at www.medicalnewstoday.com [5] Accessed on 24Apr 2020
4. “Total confirmed covid 19 deaths”, at www.ourworldindata.com [6]. Accessed on 25 Apr 2020
5. “Is covid 19 man made or natural,” at www.labmate-online.com [7] , Accessed on 25 Apr 2020
6. “Covid-19: Nikki Haley launches “ Stop communist China” campaign,” at www. timesofindia.indiatimes.com Accessed on 25 Apr 2020
7. “When will Covid 19 end? Data-driven prediction,” at www.sutd.edu.sg [8] prediction . Accessed on 27 Apr 2020
8. “A quarter of MSMEs may shut shop if lockdown persists,” at www.economictimes.indiatimes.com [9]. Accessed on 28 Apr 2020
9. “Some initial successes –but a long way togo,” at www.idr.com [10] Accessed on 28 Apr 2020

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>