The defence business in India is quite large with enough room for most players. Given the unfolding security environment it is unlikely that we would be cutting down on our defence expenditure in the foreseeable future. As a matter of fact our defence spending may just witness a proportionate rise. This years defence budget was around Rs 90 thousand crores. With the economy growing at 8-9 % the defence budget can also be expected to grow at about the same rate. Now that is a huge amount of money if we extrapolate -for say the next five to ten years.
The most important feature of defence equipment is its reliability. Now reliability implies that firstly the system must perform to the specifications stipulated and secondly it must not fail to function.
So now let us look at the big picture. Will the sizeable defence budgets, the liberalised defence industrial policy now being promulgated and the attempts at reforms in the management of the Defence R&D, the OFB and the defence PSUs give the desired impetus to our indigenous defence industry? This is the real issue. Our ambition to have a globally competitive defence industry must be realised. The question therefore to be answered is whether we are doing all that we can or is there scope for further fine-tuning our regulatory mechanisms and policies?
Before delving into policy issues it would be prudent to understand some of the special requirements of defence equipment. This is important and relevant because quite often, lack of knowledge of the uniqueness of defence requirements have resulted in locally manufactured products not finding acceptance of the user. Consequently the military is denied the equipment that it needs and the developer or the entrepreneur is disappointed or has to suffer losses.
The most important feature of defence equipment is its reliability. Now reliability implies that firstly the system must perform to the specifications stipulated and secondly it must not fail to function. The meantime between failures must be stated, it must be very high and it must achieve the claimed figures under our operational conditions. The implications are – rugged, military specifications – systems, sub systems and components. Quality control besides precision engineering would be of the utmost importance.
Curiously instead of accepting and recognising this failure one now frequently hears the view that transfer of technology deals are not really workable.
The other significant feature of major military equipment is its life. Most major systems remain in service for thirty to forty years. Therefore, when it enters service it must necessarily be as modern and contemporary as feasible. As a matter of fact the users desire is to seek equipment that is technologically ahead of what its adversaries possess. This viewpoint is logical and cannot be faulted.
If systems are to remain in service for such protracted periods they must be designed for product improvement/ upgrades. System designers and manufacturers must take this into account while conceiving products and engineering them.
Ergonomics and user friendliness are again important requirements. This is another weak area of our designers. Hopefully now they will learn from the emphasis that the automobile and telecommunications industry is paying to these features.
The next notable feature of defence equipment is the rapidly growing content of electronics and software. Today on an average the cost of embedded electronics and software on any military platform is approximately 60%. And with each generation and advancement this percentage is set to increase. The import of this feature must not be missed given our growing strength in software as also electronics.
South Africa, Israel and China have successfully exploited technologies that they paid for. Even Turkey and Brazil have done much better. We are the rare exception.
Having cursorily glanced at the special features of military hardware, we may now address the central question. Do we have the wherewithal to produce world- class military systems? Till about the eighties the answer to this question would be- unlikely or doubtful. Not today. Primarily because of the rapid growth in the automobile and the telecommunications sectors coupled with the strides that we have taken in emerging as a software superpower. It would be fair to believe that we are now poised to achieve global competitiveness in any sector we choose including defence. In what time frame and how efficiently we do it will depend on our motivation levels and the strategies we adopt.
An often-debated subject when we discuss the defence industry is self -reliance. The advocates of mindless self- reliance have for long manipulated us. It is an appealing slogan and extremely difficult to counter, particularly, when the issue has to be discussed with the uninformed. Any objective analysis would tell us that the concept of making every thing within the country is outmoded and bad economics. Even the world’s sole superpower is nowhere close to being completely self -reliant. We should be self- reliant in areas where technology control regimes have been imposed or where imports can be cut-off without serious repercussions to the supplier. Otherwise self-reliance is in creating greater interdependencies.
Even though this topic has been frequently commented upon our inclination to drift, perhaps has prevented us to draw up a clear road map on the subject. The government must at the earliest formulate an approach paper on self-reliance in defence technologies. Obviously this task cannot be entrusted to the defence scientific community alone. It could be steered by a suitably selected service officer with members from the DRDO, and other scientific bodies, industry both public and private and maybe academia. This paper then would also be very useful in ‘make or buy’ decisions of the MOD.
For technology, both would currently remain dependent on foreign companies. But then why has the governments proposal for private-public partnership not got off the ground? ”¦ because the marriage is being imposed instead of the partners choosing to wed on their own.
Linked to the question of self- reliance is the business of transfer of technology. Over the last decade or so there has been considerable criticism of the governments defence PSUs and OFB for not achieving the objectives of transfer of technology wherever this clause has been linked to procurements from abroad. In almost every instance dependencies have remained and rarely have we imbibed know how that could be exploited by us. Curiously instead of accepting and recognising this failure one now frequently hears the view that transfer of technology deals are not really workable. The technology supplier rarely parts with technology that is important or critical and therefore though on paper technology may have been transferred on the ground it does not happen. What is even more intriguing is the authorities acceptance of this ridiculous position.
It is the business of those who have paid for the technology to extract every bit of what has been paid for and maybe more. If we have not done it, the blame lies with us and not with the seller. The technology supplier will obviously try and delay or deny transfer of technology. It is for us to impose penalties if required so that contractual clauses are not deviated from. South Africa, Israel and China have successfully exploited technologies that they paid for. Even Turkey and Brazil have done much better. We are the rare exception.
Another issue currently much in debate is the theme of public-private partnership. When did the idea get mooted? It would be reasonably accurate to date its birth to some time after the announcement of the policy of opening up the defence industry to the private industry. What triggered it is the fear of survival. The private sector demanded a level playing field and fair competition. The public sector apprehended competition and argued that it would have to shut shop if the government went ahead with implementing the new defence industrial policy. The government listened and then came up with the concept of public-private partnership. The prime reason for the origin of this concept may be concern for the survival of the OFB and the defence PSUs but yet when analysed there is sound logic for such a concept.
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