Self-reliance is Still a Pipe Dream

Self-reliance is Still a Pipe Dream:

Proud to be the Largest Arms Importer

(Business Today March 17, 2013)

Major General Mrinal Suman, AVSM, VSM, PhD

Inauguration ceremony of every Defexpo is always a very disconcerting experience. Proud of the fact that India is the world’s largest importer of defence equipment, every Indian leader flaunts India’s huge shopping list. Instead of considering India’s inability to produce a single major defence system as a matter of national shame, they bask in the attention showered on them by the foreign vendors.

The current dispensation has been an unqualified failure. While self reliance in defence production continues to be a pipe dream, lack of a vibrant indigenous defence industry is costing the country dear. Foreign military equipment acts as crutches. Dependence on them makes a nation hostage to the policies of the exporting nations and captive to the dictates of unscrupulous foreign vendors.

The recent disclosure of alleged acts of transgression in the procurement of Westland Helicopters is a matter of serious concern. It has the potential to snowball into a major controversy. In case the company is blacklisted, a number of critical projects will get stalled, thereby adversely impacting the modernisation of the Indian armed forces which is already lagging behind by close to 15 years. Nearly half of the inventory is nearing the end of its useful service life and needs replacement. 

State of Equipment Profile	Desirable (Percentage)	Current Inventory (Percentage)
State of the arts equipment	30	15
Equipment of matured technologies	40	35
Equipment becoming obsolescent	30	50

Illustration: Worrisome State of the Indian Armed Forces

The government had announced an ambitious action plan in 1995 to reduce the share of defence imports from the then prevailing 70 percent to 30 percent by 2005. Utter failure of the plan can be gauged from the fact that the imports have climbed to close to 75 percent now, thereby making a mockery of much-trumpeted policy initiatives. Worse, indigenous production of 25 percent is limited to low-tech items and components. Assembly of imported sub-assemblies is ingeniously touted as indigenous production and sold to the services at unethically exorbitant profits, as in the infamous case of TATRA vehicles by Bharat Earth Movers.  

Maximum blame for the current pitiable state of India’s defence industry can be apportioned to the Department of Defence Production. It perpetuates the monopoly of an inefficient, insecure and inept public sector. Despite repeated assertions of providing equal opportunities to both the sectors, all efforts are made to keep the private sector out by all possible mears. Resultantly, even after a decade of opening of the defence sector, the private sector remains a peripheral player.

With 39 ordnance factories and 9 undertakings, the public sector possesses excellent infrastructure and manufacturing facilities. Despite periodic infusion of imported technologies, it has failed to use them as a springboard to develop newer technologies. Due to its monopolistic pre-eminence and assured orders, a culture of complacency has set in. 

Fully aware of its weaknesses, the public sector is wary of competing against a far more efficient private sector. All stratagems are tried to bag contracts through nomination. Irrespective of the degree of urgency, the public sector does not let any proposal progress unless it is awarded to it. The case of Tactical Communication System is indicative of the clout enjoyed by the public sector. Although the requirement was first projected in 1996, it has taken the government 16 long years to overcome the obduracy of the public sector which wanted to keep the private sector out. 

The Defence Research and Development Organisation (DRDO) has let the services and the nation down. It has the dubious distinction of never developing any equipment in the required time-frame and conforming to the operational parameters. It has been a saga of false promises, exaggerated claims, inexplicable delays, cost overruns and sub-optimal products. The only success it has to its credit relates to the replication of some imported low-tech products (euphemistically called ‘reverse engineering’ and ‘indigenisation’).

It is the abysmal failure of DRDO to develop defence technologies in the country that forces India to depend on foreign manufacturers. Not a single state-of-the-art weapon system has been developed or produced indigenously so far. There are three reasons for its inability to deliver – absence of accountability, lack of focus and failure to develop scientific disposition. 

India has failed to appreciate that management of defence production and acquisition is a multifaceted process requiring highly specialised handling. One can have the best of organisations and ideal procedures in place but ultimately any organisation or procedure is as good as the people who work it. Indifferent quality of the functionaries is another major reason for the current mess. 

Officials who formulate policies and perform acquisition functions are drawn from the civil services and the defence forces. They are neither selected for any demonstrated flair/talent nor are given any special training. Additionally, they lack necessary education to comprehend competing technologies and technicalities of complex weapon systems. For most of them it is just another routine assignment and their approach continues to remain entrenched in bureaucratic mediocrity and procedural quagmire.

Further, being ill-equipped to understand the impact of intricate dynamics of arms trade on the growth of indigenous defence industry, they formulate policies that are too convoluted to succeed.  For example, the policy on FDI in defence sector has been an utter failure as foreign investors find the upper limit of 26 percent and associated caveats highly dissuading.  Similarly, instead of exploiting the enormous leverage of offsets to acquire cutting-edge technology, it is being wasted on transitory gains of counter-trade.

A great deal of euphoria was generated when the government issued the Defence Production Policy in January 2011. It was hailed as a catalyst to enhance potential of the Indian defence industry, especially the private sector and SMEs. Optimism has since been replaced by a sense of despondency. The policy has turned out to be damp squib.

Finally, it is time the government sheds its pro-public sector mindset and provides equal opportunities to the private sector. It must consider both the public and the private sectors as national assets and harness their potential. Unfortunately, no encouraging signs are visible as yet.*****