March 29, 2014

India's defence industry languishes

Monopoly of the defence PSUs has to end
G Parthasarathy 27/3/14

Engineers work on a LCA Tejas before its induction into the IAF. A PTI file photo
Speaking on the 15th anniversary of the Pokhran nuclear test last year, Narendra Modi observed: “There is a crucial question we have to answer — how do we become self-sufficient in defence manufacturing? This is not only about military power but also about being self-reliant for our defence equipment”. India has, since 2011, retained the dubious distinction of replacing China as the largest arms importer in the world. According to SIPRI, India’s major arms imports surged by 111 per cent in the last five years compared to 2004-2008.

China’s arms imports have declined. It has successfully leveraged its arms imports to engineer and develop a vibrant defence industry, now exporting armaments, ranging from fighter aircraft and frigates to missiles and rifles. Pakistan’s Al Khalid tank, frontline JF 17 fighter and recently acquired frigates are all from China. Its main ballistic missiles, the Shaheen 1 and Shaheen 2, are replicas of their Chinese counterparts. Moreover, China is a regular supplier of arms to our other neighbours like Myanmar, Bangladesh and Sri Lanka. The pathetic inadequacies of India's defence industry were exposed when it was unable to meet Afghanistan's wish list so vital for its security as American forces prepare to leave.

While our missile development programme gives us pride, our nuclear deterrent will be credible only when Agni 5 and the Navy’s nuclear submarines become fully operational. We are not in a position to export any major weapons platform. The 5.56 mm (INSAS) Automatic Rifle, manufactured by our ordnance factories will be rejected by any modern army. There is a total absence of accountability in the entire process of defence acquisitions and domestic production. The most classic case of such bungling pertains to the famous/infamous Bofors FH 77, 155 mm Howitzer.

In 1986 India signed a $285 million contract for the supply of 410 155 mm Bofors Howitzers. The contract included a provision for the manufacture of 1000 guns in India. The Bofors deal, which led to the outrageous arrest of a Defence Secretary of impeccable integrity, S.K. Bhatnagar, became a turning point, further complicating the already cumbersome defence acquisition procedures. The government cancelled the entire contract without arranging for either domestic manufacture or selecting an alternative gun. Like in all such cases, the armed forces rushed in for the import of an alternative. The acquisition process became more complicated, as offers for comparable weapon systems from Singapore and South Africa were rejected on allegations of kickbacks.

India would have been hard pressed to win the Kargil conflict speedily without the firepower that the Bofors gun provided. But we now come to the strange part of this entire episode. By 1987, India had received the entire design data and transfer of technology from Sweden for the manufacture of the Bofors gun. For over 20 years, these designs gathered dust in the offices of the Defence Production Establishment. It was only when no alternative was available that these designs were discovered and after much procrastination, the Ordnance Factories commenced a process of assembly. While the first test of the indigenous gun understandably failed, the Ordnance Factory Board has now successfully moved to commence its manufacture soon, with a range of 38 km as against the 30 km range of the Swedish Bofors. We have similarly successfully designed and developed multi-barrelled rocket launchers. But the larger issue is: Who is to be held responsible for mothballing the designs received from Sweden and why was the task of domestic manufacture not undertaken earlier?

What ails India’s defence industry is now common knowledge. There are reports of a number of committees, including those headed by defence scientist Rama Rao and by Vijay Kelkar, apart from the report of the Naresh Chandra Task Force. The contours of these reports are broadly known. It is now obvious that a few issues need to be clearly and expeditiously addressed. First, the restrictions on foreign investment in high-tech, defence-related industries need radical liberalisation. Secondly, the monopoly of the public sector institutions in defence production has to end. Even today some of the most sensitive and critical assemblies for equipment, ranging from nuclear submarines to tanks and warships are being sourced from the private sector, which must be given a level-playing field for competing with defence PSUs.

Defence production must not involve a predominant emphasis on imports and assembly as at present. There has to be a large measure of import substitution of a vast array of critical raw materials, components and sub-systems, amounting to billions of dollars each year, now imported for regular production by the defence PSUs under the umbrella of “licence manufacture”. The private sector with help from the DRDO could play a significant role in this area.

A good starting point for a new approach to defence production could be in regard to the light combat aircraft, which has now undergone substantial trials and could be inducted into service significantly if it is fast-tracked. By all accounts, both its air defence version and its naval version will have a performance comparable to the Swedish Viggen, which was one of the aircraft under consideration for acquisition by the IAF. There will be the usual breast-beating and predictable opposition by the Air Force. But this process has to be undertaken once we are assured that the aircraft will even initially be able to meet any anticipated threat from across our western borders.

India has an added advantage over China. It can get weapons systems and defence technology from Europe and the USA. We will have to leverage this, together with our access to weapons and technology from Israel and Russia, to demand and get the best terms possible for building an indigenous high-tech defence industrial base. Moreover, the present structure of our Defence Ministry, which is run by generalist bureaucrats, needs drastic change. Far greater integration of staff and procedures between the Service Headquarters and the Ministry of Defence is imperative to halt the setbacks of the recent past in civil- military relations.

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