At the recently concluded Defence Exposition (Defexpo) three interesting statements were made by people who matter. The defence secretary stated that identification of Strategic Partners (SPs), potentially key private sector companies in our Make in India
efforts to manufacture military platforms, was still in a very preliminary stage and it might take at least another year for a decision to emerge. Second is the statement of the defence minister that she has to walk a “thin line” while considering the demands of the armed forces to purchase rather than make, and finally, the Prime Minister promised greater involvement of foreign companies along with our own private sector in making military equipment.
In its very first year the government decided to identify four SPs, each to manufacture one major military platform in conjunction with a foreign collaborator, for the Indian military as well as for export. Four years down the line, we now know that a decision will not come anytime soon. Therefore, getting those platforms made in the private sector remains a non-starter. Further, the specialised skills needed to manufacture military platforms are simply non-existent other than with the PSUs, howsoever unsatisfactory these might be. So, apart from the Navy
which has acquired expertise in shipbuilding over decades, the other two services will continue to depend on imports-cum-licence production. In 1994, the then government appointed a committee under the chairmanship of Dr Kalam and tasked it with converting the import-to-indigenous content of defence hardware from 70:30 to 30:70 within 10 years. Nearly 25 years later we are still where we were. This is partly because sufficient capabilities did not exist then and could not be created since. Despite producing Sukhoi 30s under licence, HAL has been unable to make much progress in getting its major assemblies indigenised and many of those which are fitted in these aircraft have to be shipped back to the supplier for repair and overhaul.
This brings us to the defence minister’s statement. As the political head she bears responsibility for defence preparedness and the question of a “thin line” is difficult to understand. It is her right to overrule military advice if she feels it is damaging in the long term, which import procurement clearly is and this is where a “red line” is needed to be drawn. It is correct to leave operations and human resource management to the leadership of the armed forces but for the political leadership to shy away from hard make-or-buy decisions is taking the easy way out. The decision to purchase 36 Rafales while jettisoning the earlier plan to buy 16 and make 110 of them was surely one of the short-sighted decisions of this government. If the predecessor had procrastinated, this government could have hastened finalisation. Had the original project been contracted in 2015, the first of 16 imported aircraft would be coming in this year and facilities to build a great number within the country would be close to completion with long-term benefits.
TALL ORDER Prime Minister Narendra Modi’s assurance to help private companies enter major sectors like manufacture of aircraft and submarines in collaboration with chosen foreign partners lacks credibility
The Prime Minister’s assurance to help private companies enter major sectors like manufacture of aircraft and submarines in collaboration with chosen foreign partners lacks credibility; it may not even be commercially viable. Despite the vast clientele that it serves across the world, the USA
has only three companies that manufacture fixed wing military aircraft. For India, one group turning out such platforms is good enough and if it is there already in the form of HAL then that asset needs to be strengthened rather than creating new ones. Further, the required transfer of technology, even if it comes, is not easy to absorb in quick time given the inadequacy of skills. Defence PSUs producing military platforms have reached where they have after decades of plodding along and to expect that privately-owned companies will be able to race through is to ignore reality. A wiser course would be to first create capabilities in the private sector in the field of components and assemblies and later move to platforms if that at all becomes necessary. Alternatively, privatise the relevant PSUs.
To these issues must be linked availability of financial resources. Budgetary allocation for defence over the last four years has been about the lowest in decades, with the 2018-19 outlay of Rs 2.74 trillion being the least ever as a percentage of GDP. The modernisation element cannot cover even ongoing projects leave aside any new ones. Given competing demands, equally critical, this figure can increase but marginally every year. The position can change only if the force structure of the military itself is reviewed and funds reallocated as argued by this writer earlier (March 25).
In sum, India will not be able to export significant military hardware for some time. Those platforms that are made in India will largely arise from licence production linked to import. Yet, every such scheme will result in progressively updating skills. Rather than chase shadows we must invest all our limited resources in PSUs which have potential to grow even as they create indigenous private sector capabilities in selected areas. The Navy’s shipbuilding experience is a lesson to learn from. As an example, even the indigenously built nuclear submarine INS Arihant
and its successors, leave aside the many surface ships built and delivered, have substantial private sector participation. Hopefully, Defexpo 2019 will bring some of these realities to the table.
The author is a former Director General, Defence Staff. He has also served as member of the National Security Advisory Board