Farewell to foreign arms?
Recovering from the initial embarrassment of the revelations, the government seems to have finally accepted that the long-term solution to rampant corruption is an urgent and immediate turn towards aggressive indigenisation in military manufacturing. And indications emerging from the Ministry of Defence are that such a new course of action is under preparation, and could soon be unveiled. However, the transition from being a heavy importer of military wares to creating a robust military-industrial complex within is a stroll in an unmapped minefield.
This is mainly because China has aggressively pursued indigenisation over the past couple of decades . As a result most of its current defence budget — officially estimated at $119 billion for this year — will be spent on purchases from within the country. As such, a massive amount of money flows into its domestic military-industrial complex which has a multiplier effect — on R&D, employment generation, and battlefield surprises for adversaries.
The fact is that India's present efforts, and systems , are not up to the task of creating a robust military-industrial complex. The vested interests of the defence public sector units (DPSUs), ordnance factory board (OFB) and the Defence Research and Development Organisation (DRDO) actually symbolise what is stopping India from creating such a thriving complex, even though the country has one of the world's most dynamic manufacturing sectors. By keeping private sector on the margins of defence procurement, India has allowed itself to be caught in a vortex of imports and public sector inefficiencies.
Yet many Indian private sector players have exhibited their manufacturing capabilities, innovative leadership and growth ambitions across various segments. Several Tata group companies, L&T, the Mahindra group, Reliance and others continue to remain optimistic of a breakthrough. Whenever called in to meet a challenge these companies have shown they are capable of it. Larsen & Toubro built the hull for India's indigenous nuclear submarine and is now ready to build conventional submarines. However, the navy and the MoD do not seem to be very enthusiastic. Tata Power SED (Strategic Electronics Division) recently exhibited a 155mm/52 calibre truck mounted howitzer, developed in partnership with Denel of South Africa. The company says it is presently 50 per cent indigenous. However, the Army doesn't seem to be very excited, arguing that Denel is blacklisted in India.
The story doesn't end there. Reliance Industries Limited has committed its intent to invest about $500 million to $1 billion (approx Rs 2,750 crore to Rs 5,500 crore) in developing an aerospace centre. Reliance claimed it would hire about 1,500 people for the division. The number of such private firms with big ambitions is not limited to these few. Mahindra, Punj Lloyd, other Tata firms, and several others too have made their intent rather clear.
But standing in the way of a turn towards aggressive indigenization are two specific challenges — DRDO's monopoly (in conjunction with public sector companies ) and the powerful influence of arms agents. "It is easy to talk about indigenisation. But in practice it is going to be extremely difficult. From Antony shedding his own Nehruvian obsessions with public sector to forcing armed forces to appreciating the need for indigenisation, it is a complicated scenario ," says the CEO of a leading Indian private sector player.
The biggest challenge would actually from the DPSUs, ordnance factories and the DRDO. They together account for around 30 per cent of the annual defence procurement, and almost 100 per cent of military research. Beyond the numbers and tall claims, these groups are today clearly bloated, inefficient monopolies. Worse, they are all directly or indirectly promoting India's heavy dependence on foreign suppliers, and this remains the worst-kept secret of Indian defence procurement.
DRDO's lofty claims do not mean much today to the Indian military, which also has to meet the challenge of insurgencies. Most of the major weapon platforms that the research agency — on its own or with other government partners — set out to make are still far from being inducted by the forces.
DRDO is no longer a robust research agency capable of catering to the growing demands of 21st century warfare. The Rama Rao Committee's recommendations for reforming DRDO were a telling story of just what's wrong. The committee said the DRDO brand was "wilting" . It pointed out that just 3 per cent of DRDO scientists had PhDs. The committee had also identified the lack of interaction with end users (the military) at all levels of project execution as among the problems. And yet, the committee's recommendations for overhauling DRDO are woefully inadequate, admits a senior MoD official.
DPSUs and ordnance factories (OFB) have also become liabilities. While the long-pending recommendation for corporatising ordnance factories (in which these government departments are turned into PSUs) has been in cold storage because of employee resistance, OFB has failed to evolve into a modern factory network. Consider the INSAS (Indian Small Arms System) rifle, meant to be the primary personal weapon of the Indian soldier; it has now been dumped by the Army. Nothing better captures the OFB problem. Today, the Indian Army and other arms of the military are scouting the global market looking to place huge orders for personal rifles.
And then there are the powerful arms dealers, who have been partnering with foreign firms to sell wares to Indian armed forces. "Middlemen are thriving because foreign companies do not have the wherewithal to navigate the Indian military-bureaucratic and political systems. We are extremely corrupt, inefficient and biased," says a senior military officer, who got himself out of an important posting in procurements after he came face to face with the ugly underbelly of Indian defence procurement.
Battlefield uncertainties have exponentially gone up in recent decades. Everything from unmanned combat vehicles to stealth technology is redefining the way we fight. The challenge, then, is to find a new architecture to create a robust military research and development culture; and an industrial complex in India. The private sector cannot be kept out of such an effort.