Inaugurating a three-day international seminar on aerospace technologies in Bengaluru on 07 February 2011, Defence Minister Antony admitted that India had not benefitted much from the technologies transferred to it in the past. It was a candid admission of the failure of the procurement regime to ensure infusion of meaningful technologies and accretion of desired benefits to the Indian industry.
India has been obtaining technologies under ‘Buy and Make’ route wherein a limited quantity is purchased from a foreign vendor in fully built condition and the bulk quantity is manufactured in India under licence through transfer of technology (ToT). Despite the fact that India has been following this route for decades for all large scale purchases like tanks (T-55, T-72 and T-90) and aircraft (MiG series, Jaguar, Sukhoi and Hawk), no genuine and substantial technology has been transferred to India. Worse, foreign vendors have been charging India hefty amounts for allowing licensed production.
Indian policy makers have been using the term ToT in a highly misleading manner. Under the taxonomy of ToT, they have been seeking know-how to assemble systems in India. Whereas technology implies total know-how for product manufacture from component level, indigenous production remains limited to assembling of sub-assemblies.
‘Technology’ is one of the most commonly used yet variously interpreted terms. Although a number of definitions exist, the World Intellectual Property Organisation provides the most comprehensive definition. According to it, technology pertaining to industrial production is ‘systematic knowledge for product manufacture and service provision’. There are two vital components of the definition. One, it is knowledge that is systematic in its evolution, delineation and description. It is only then that it can be intelligently implemented and purposefully exploited. Two, it should facilitate product manufacture and service provision. For that it must cover the complete gamut to include engineering and manufacturing details for fabrication, assembly, test and maintenance.
As seen above, technology is knowledge that is all-inclusive and fully caters for all requirements for product manufacture. There can be no gaps in the knowledge that may impede implementation. Although knowledge is essentially an intangible attribute, when transformed into technology it becomes a tangible asset. Therefore, conversion of knowledge into technology entails preparation of engineering and manufacturing documentation to enable production of the article from component level and its subsequent operation and maintenance.
ToT under ‘Buy and Make’ Procedure
As every product entails integration of multiple sub-systems, every technology package consists of a number of sub-technologies. Therefore, negotiation of technology for the manufacture of a defence system/product has to factor in all sub-technologies that go into it.
Unfortunately, Indian policy makers have been using the term ToT in a highly misleading manner. Under the taxonomy of ToT, they have been seeking know-how to assemble systems in India. Whereas technology implies total know-how for product manufacture from component level, indigenous production remains limited to assembling of sub-assemblies to deliver fully built units to the services. Worse, Original Equipment Manufacturer (OEM) retains exclusive right to supply sub-assemblies.
“¦not a single imported technology during the last three decades has provided a springboard for the development of superior technologies testifies the total failure of the current dispensation.
Although the Defence Procurement Procedure (DPP) provides detailed guidelines under ‘Buy and Make’ procedure, these have been evolved purely to cater to the interests of public sector entities who are always nominated as Indian recipients. DPP delineates the following four phases for indigenous production:-
- Phase 0 – Receipt of fully assembled and tested product from OEM.
- Phase 1 – Receipt of ‘Semi Knocked Down’ (SKD) kits provided by OEM. Kits to consist of sub-systems, assemblies, sub-assemblies and modules assembled and tested by OEM and/or his vendors/sub-contractors. Recipient to carry out final assembly and testing of the product.
- Phase 2 – Receipt of ‘Completely Knocked Down’ (CKD) kits provided by OEM in the form of unassembled Bill of Materials. CKD kit may include certain components/sub-assemblies available ‘Commercially Off The Shelf’ (COTS) from multiple vendors as fully finished items. Recipient to carry out assembly and test of individual PCBs/modules/sub-assemblies/assemblies/sub-systems from component level and then carry out final assembly and testing of the product.
- Phase 3 – Shall be based on supply of proprietary items as Indigenous Manufacture (IM) kit by OEM. Recipient to procure all components or raw materials and carry out complete fabrication, assembly and testing of the product.
As can be seen, Phase 0 entails outright purchase of fully built product and it is incorrect to count it as a stage in ToT process. Similarly, Phase 1 relates more to screw-driver technology of assembling major sub-assemblies and means little in terms of infusion of technology. Even Phase 2 has limited value as regards ToT unless it culminates in Phase 3. It is only in Phase 3 that a recipient receives detailed know-how through engineering and manufacturing documentation to enable production from component level.