Self-reliance in defence

Over the past few weeks we have heard a lot about the Rafale deal in the political playground and the media. The focus of the arguments is mainly around the cost of the present deal as compared to the earlier one which was under negotiation and about the role of the Prime Minister’s Office (PMO) in the negotiating process. This particular football will continue to be kicked around during the election campaign and after. This is par for the course for a major international arms acquisition deal. 

The real problem is being bypassed in this debate. It is our heavy dependence on imported arms supplies. According to the SIPRI (Stockholm International Peace Research Institute) database, the volume of international arms transfers to India was around $3 billion in 2017.

do not depend on arms imports except from close allies, the arms transfer to all of them being just $4 billion in 2017. In fact, many of them are major exporters of sophisticated arms.

Illustration: Ajay Mohanty
No country that depends heavily on others for critical weapons systems can hope to have strategic independence. From a long-term perspective, the arguments voiced about the Rafale deal do not really address what should be our core concern — our continuing dependence on other powers not just for sophisticated systems like fighter planes but even for basic things like rifles. Our defence acquisition process has failed to stimulate long-term investments in armaments research, precision engineering, new materials, sophisticated electronics and other such areas that are the foundation for the manufacture of sophisticated weapons.

A defence equipment industry has to rest on a diverse and substantial manufacturing capacity and research competence in the economy as a whole if it is to keep up with its competitors. That is why Pandit Nehru’s note on defence policy written more than 70 years ago in 1946 states: “No country which is not industrialized can carry on war for long, however good the army might be. No country which has not got its scientific research in all its forms and of the highest standing, can compete in industry or in war with another.” This strategic perception, rather than the Mahalanobis model, lay behind the drive to promote the rapid development of basic industries and the strong commitment and support given for the establishment of defence-related R&D capacities like the Defence Research and Development Organisation (DRDO) and the Atomic Energy Commission. 

How well have we done on these twin objectives of building manufacturing capacity and research competence? 

At the macro level, the share of manufacturing in GDP did rise in the first phase of planning from around 11 per cent to nearly 16 per cent by the mid-seventies. But since then this proportion has hovered around the 17 per cent mark. This aggregate number of course does not capture the definite change in the degree of sophistication in the manufacturing sector. Moreover, we must recognise that developments outside the manufacturing sector, for instance, in information technology, also have substantial strategic value. Yet if one compares India to China, one cannot escape the conclusion that in most sophisticated products we are still dependent on imports for production technologies, specialised materials and precision-engineered components. 

With regard to science and technology (S&T), the pic­­ture is not much better. India accounts for about 4 per cent of global R&D spending, according to the au­thoritative Batelle assessment. For comparison, China accounts for 21 per cent, more or less equal to the share of Europe and only a little short of the share of the USA. Our R&D spending as a proportion of GDP is just 0.7 per cent, according to official statistics.

Clearly we have a long way to go in meeting the ch­a­llenge of creating world-class manufacturing and S&T capacity. A determined effort to develop a sophisti­c­ated defence equipment industry by providing long-t­erm assurance of demand can play a crucial role not just for strategic independence but also for upgrading the civilian part of the economy because of the potent­i­al spin-offs. Much of the United States’ strength in ci­v­ilian technology areas rests on heavy investments in de­fence research and production, both by the government and the private sector. The internet and inform­ation technology are prime examples of this spin-off.

As far back as 2004-05, the Kelkar Committee report on strengthening self-reliance in defence preparedness laid out a glide path for moving from import dependence to building genuinely Indian weaponry. A key part of this was the identification of champion companies which could undertake long-term research, development and production in the private and public sectors.

Unfortunately, this has not happened. On the one ha­nd, public sector units like Hindustan Aeronautics Ltd (HAL), which have built substantial technical com­pe­­­­­tence, are being bypassed for perceived shortcomi­n­­­gs in performance, particularly with regard to timely de­­­­­livery. On the other hand, the effort to build compe­t­­­ence in the private sector has not gone much beyond co­­n­tract manufacturing. Long-term commitments of as­­s­ured demand to promote research and competence bu­­i­l­ding in private sector companies are still unknown, pe­r­­haps because of a fear about crony capitalism accus­a­­­tions. The DRDO has been funded and accounts for ab­­out one-third of public spending on S&T. It has some sig­­n­ificant achievements to its credit, but there is still a big trust deficit between the user services and the DRDO. Yet another factor is the pressure to quickly ma­­tch the capabilities of potential foes by importing ra­­ther than waiting for an indigenous option. As for “pr­i­vate incentives” from suppliers, the less said the better.

These fault lines need to be erased. We must now aim at bringing together the user services, the researchers and the chosen producing companies together in national missions for specific defence systems. We must short-circuit the political jousting by creating a multi-party security council that will be asked to endorse these national missions. We must be ready to live with some short-term risks for stronger and more reliable long-term security. Only then will we have the strategic independence that we need to protect our national interests.
(1) SIPRI values transfers at a standardised price, which for the Rafale, for instance, is $55 million per aircraft, way below what India will actually pay

(2) This includes the present and potential aspirants, other than India, for permanent membership of the UN Security Council: The USA, Russia, China, the UK, France, Germany, Italy, Japan, Brazil and South Africa

(3) For more on this, see Ajai Shukla “Why Defence Indigenisation Fails”, Business Standard, July 30, 2018

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel