By JN Ram
With the regional security environment around the country remaining perilous, India is in the midst of an ambitious military modernisation programme as the central government has sought to undergird India’s expanded international profile on economic diplomacy of which ‘business of defence’ is a critical part. Given its heavy reliance on imports for critical military hardware, it will certainly take some time for India to shed its position of being one of the world’s largest arms importers, but the political willingness to reduce import dependence by creating a domestic defence industrial base, is apparent.
There have been some encouraging developments with an emphasis on “local to glocal” in the backdrop of the call for Atmanirbhar Bharat. The production of PPE kits, collaboration of automobile industries to produce ventilators, manufacture of more than 70 Made in India products by the DRDO, development of the low-cost ventilator Prana-Vayu by IIT Roorkee, the products developed by start-ups in Karnataka to tackle COVID-19 are just a few examples of the capability of Indian scientists, IT professionals and technocrats.
India must aim to gradually reduce imports in every sector from crude oil to heavy machinery based on the locally available resources, talent, and skills of the human capital. There has to be a paradigm shift in all areas for Indian products to be globally competitive while remaining vocal about local. The private sector too have to come forward and support the government initiative wherever required by playing a pro-active role in building a self-reliant India and not just play anancillary role. This will also require massive investments in R&D by the private sector. The modernisation of PSUs too needs to take place in terms of technology. India has to also drastically increase manufacturing in areas like hi-tech medical devices and equipment to cut down imports and save precious foreign exchange.
We Indians need to overcome the setbacks caused by the pandemic while showcasing the country’s collective resolve to become “Atmanirbhar”. The country needs to march ahead by connecting its human resources and technological capabilities. And as Prime Minister Narendra Modi said, India would need to work on “skill, scale and speed” if it hoped to compete with China. India has the potential to emerge as the global hub for providing skilled manpower to other nations. We can prove to the world that the 21st century belongs to India through self-belief, dedication and discipline.
THE PROGRESSIVE STEPS
In a major bid to bolster the fledging domestic defence production, India on August 9 announced a negative arms import list, under which import of 101 weapon systems and platforms from abroad would be progressively banned from December 2020 to December 2025.
The 101 items with different embargo timelines range from ammunition, sonars, radars, artillery guns and assault rifles to missile destroyers, transport aircraft, light combat helicopters, wheeled armoured fighting vehicles, conventional diesel electric submarines and communication satellites. Though outright procurements of the notified products from abroad will be banned, Indian public and private companies can continue to tie up with foreign companies to manufacture them in India. The new negative list includes many products that are already being produced domestically or are in the research and development phase. The list, for instance, includes 123 Tejas light combat aircraft that IAF is expected to induct for over Rs 85,000 crore. Such products have been included to ensure their indigenous content is increased progressively. This decision will offer a great opportunity to the Indian defence industry to manufacture the items in the negative list by using their own design and development capabilities or adopting technologies by DRDO to meet the requirements of the armed forces. Now with the negative list, it is estimated contracts worth almost four (4) lakh crore will be placed upon the domestic industry within the next six to seven years.
This is in tune with the government’s decision in May 2020 when the Finance Minister, in an unprecedented move, announced that the automatic route limit for foreign investment in the defence sector will be raised from 49 per cent to 74 per cent. The liberalisation of foreign direct investment in defence manufacturing should open the door to more joint ventures of foreign and Indian companies in this sector. This move should overcome the obstacle of lack of control, which acted as the single most significant obstruction to licensing of patented technology.
The major announcements are indeed an extension of the policy reforms that have been in the pipeline since 2014. Although the defence sector was opened to direct private sector participation way back in 2001, it had not generated enough interest due to numerous reasons, the significant ones being an indifferent policy and the lack of access to users. A number of policy reforms over the last few years, aimed to bridge the gap between defence modernisation and indigenisation by getting wider private sector participation, had just begun to show results.
This major announcement would also see a flurry of domestic industrial activity in the research, design and manufacture of systems and sub-systems. For long, Indian companies which have been sub-contractors to prominent defence manufacturers abroad would now have the prospect of directly contributing to the Indian defence manufacturing. Indian companies in collaboration with foreign companies would soon be manufacturing fighter aircraft, submarines, and other branded original equipment manufacturing (OEM) platforms in India, realising the dream of making India self-reliant in defence production.
The private sector will also need government’s support and backing in order to make the transition from ‘Make in India’ to ‘Made for India’. Globally too, there is a trend towards greater involvement of the private sector in the defence R&D.
Indian private sector companies such as L&T, Tata Power Strategic Engineering Division and Rolta have been successfully involved in some of the current R&D projects and this process needs to be institutionalised. It must be accompanied by clearly defined technological priorities, understanding global technological trends and identifying critical technologies, especially those that may be denied to India as part of the many technology denial regimes. Only then can India’s arms import vulnerability be overcome and a robust domestic defence industrial base can be built.
Also, India needs to tackle the problem of some of our defence industries which prefer to deliver better technologies abroad as they find it difficult to be price-competitive and sustain the long procurement process in India. To get the best value from our indigenous manufacturers, it is important that the provisions of Enhanced Performance Parameters in DPP 2016, that tried to achieve intersection of best technology (T1) with lowest bid (L1), is utilised more. ‘Price Indexing of Technology’ must be undertaken by the services, with help of technology and costing experts.
India has to stride forward and look at the future needs of its defence services and its law enforcement agencies. Indian industries will need to set up viable platforms both in physical and virtual worlds using digital platforms. The defence industry needs an overhaul of existing regulations and practices to make it more thriving. A long-term collective perspective plan of the requirements of the armed forces should give industry a clear picture of future requirements. DPP 2020 should incorporate guidelines to promote forward-looking strategic partnerships between Indian and foreign companies, with a view to achieving indigenisation over a period of time for even sophisticated platforms. Cost evaluation has to evolve from mechanical application of the L1 (lowest financial bid) principle to prioritising indigenous content. The definition of indigenisation itself needs to privilege technology over value or volume. Investment, Indian or foreign, will be viable only if the door to defence exports is opened, with a transparent policy. The role of DRDO as the government’s sole adviser, developer and evaluator of technologies have to be addressed to give the private industry a level playing field for developing defence technologies.
India needs to “think big” and end its tendency to “think very small”, and this seems to be changing for good now as Prime Minister Narendra Modi is also expected to present a new outline before the nation for a self-reliant India in his address from the ramparts of the Red Fort on the Independence Day.
-The writer is an experienced journalist with mainstream media and keen observer of defence, diplomacy and strategic affairs. The views expressed are personal and do not necessarily carry the views of Raksha Anirveda