Defence Industry

Defence Industry: Change in approach overdue
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Issue Vol 23.1 Jan-Mar2008 | Date : 22 Dec , 2010

With these purchases in the pipeline, if we did not get all the technologies we need, we will have only ourselves to blame. Procurement terms must state our purchase imperatives unambiguously. As a matter of fact we could consider modifying our procedures when acquiring big ticket items. Take the case of advanced fighters. All contenders have proven comparable systems. The differences essentially stem from design philosophies and the source of sub-systems and systems that have been selected for integration.

Also read: Pakistan’s Islamic Odyssey : dangers ahead

The gaps in features are so narrow that quite often the choice can be a matter of individual predilection. The same arguments can be applied to the helicopters we want or the submarines. Selection could therefore be based on the totality of the package a vendor offers and not just the L-1 criteria after qualifying. To what extent and in what manner is technology being offered? What are the long term buy back agreements? What kind of investments is the vendor making in India? For such high value transactions we must extract much more than what we have done hither to.

The rules of interaction with industry representatives must change. The MOD and the services headquarters should be more accessible to domestic industry. Currently doors for foreigners open up much more easily.

We need to therefore delve deeper into the manner in which we pursue major acquisitions. There could also be a case for some co-ordination with say the Civil Aviation Ministry taking into account the carriers that Air India would be planning to induct. An important caveat at this point would be in order: under no circumstances should the views of the concerned service headquarter not be the ultimate deciding factor.

While charting the strategy for the development of our domestic defence industry we must identify technologies that require special attention; technologies where our capabilities merit quantum upgradation. It can be assumed that the DRDO, the services headquarters, and also the CII, would have undertaken studies on this subject. Our acquisition plans must look at integrating the road map that we should have drawn for technology inflows and digestion.

Electronics, optics, communications and avionics, are generally the areas that we should be focussing on. We have for a few decades depended exclusively on Bharat Electronics for all our communication requirements as also all our electro-optical products. Today Bharat Electronics may be a profit making company but has little to offer in terms of future technologies or next generation products. The same story applies to HAL, notwithstanding the successful development of the ALH, which should have been offered at least ten years earlier.

There is therefore a strong case to encourage private sector companies to enter these fields. The logic that since the Government has made investments in creating capabilities, all orders must be confined to these companies has proven over time to be counterproductive. A change in approach is long overdue. India urgently needs an HAL/BE in the private sector. The Government must encourage and support their emergence.

The Indian Government has gradually opened its key sectors to foreign participation and foreign investment in the Indian aerospace and defence industry which currently has a 26 percent cap.

The subject of exports has also been grossly neglected. There may be a Joint Secretary in the Department of Defence Production responsible for promoting exports, but he can do little under the present dispensation. Pakistan’s Ordnance Factories have consistently exported more than us. No defence industry can expect to sustain itself purely on the basis of sales in the domestic market.

Our private sector, unlike our Government owned establishments, have understood this. But they need much more support. The Government and the industry have to work together in a closely co-ordinated manner. Witness the way in which over the past few months the Heads of Governments of Germany, UK and France have brought with them the captains of their defence industries to India. The agenda requires no amplification. Here again we must push to get our act together

If India’s defence industry is today on the threshold of transformation, considerable credit must be given to the role played by the CII. FICCI has also contributed, but only marginally. We may recall the first Army- Industry Partnership Seminar conducted in the mid nineties under the aegis of the CII.

Many of us skeptics murmured—‘what’s the point?’ But CII persevered. It continued with its efforts to nudge the industry and simultaneously influence our policy makers. It has also been actively persuading the big global players to look at teaming with the Indian industry. The results though slow, in the coming times would soon be there for us to witness. Having reached thus far, the CII must not take its foot off the pedal. Much more still needs to be done.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Lt Gen Vinay Shankar

Lt Gen Vinay Shankar, former Director General Artillery.

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