Defence Industry

India's Defence Economics
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Issue Vol 21.4 Oct-Dec2006 | Date : 09 Nov , 2010


Recent changes in Government’s policies encompass four areas:

Joint ventures have been permitted in the defence sector”¦ Joint ventures will help, gradually, to reduce the technology gap and R&D gestation times.

  • An apex multi-disciplinary Defence Procurement Agency has been established.
  • Joint ventures have been permitted in the defence sector. America, Russia, France, Britain. Israel and South Africa, each having well-established military-industrial complexes and defence industries, have offered to join with India to co-develop, co-produce and co-market defence equipment. Joint ventures will help, gradually, to reduce the technology gap and R&D gestation times.
  • Production of defence equipment that was reserved for the public sector has been opened up to the private sector.
  • Defence exports are being encouraged.

This setting presents an opportunity for the Armed Forces, the Defence Research Laboratories, Public Sector Defence Production Units and India’s Private Sector corporations to close ranks.

The first step is to replace “Staff Requirements” by “Staff Desirements”. By limiting themselves to stating the capabilities that are desired, the Services can share their responsibility for defence with other equally earnest segments of Industry and Government.

This will give flexibility to DRDO and provide focus to Defence Industry (both public sector and private sector) in their selection of joint ventures with foreign corporations. They alone know best which technologies the collaborator must transfer to achieve the futuristic capability in the timeframe that the Services desire.

The choice of Joint ventures must be seen by collaborators as dependant on the transfer of the ‘sunrise’ technologies that India requires rather than on the transfer of ‘sunset’ technologies that the collaborator no longer needs.

An essential pre-requisite for success in defence exports has always been whether equipment is in service with the vendor country’s Defence Services. This gives the customer credible assurance of life cycle support. Acceptance into service of the “first version” of Evolutionary Acquisition increases the potential for successful export. It reduces the initial cost of weapon induction. Evolutionary upgrades spread the burden on the budget.

Taken together, changed mindsets, the new policies and concepts like Evolutionary Acquisition and Spiral Development can mitigate the present customer-vendor relationship between the Services and the DRDO. As the Navy’s APSOH has shown, a ‘desirement’ was not only able to deliver world class equipment two decades ago but its upgrades continue to be fitted in the Navy’s latest warships.


  1. The general grouse of the Army, Navy and the Air Force is that DRDO takes much too long to develop and deliver their requirements. When delays become operationally unacceptable, import has to be resorted to, which because of gestation, entails further delays.
  2. DRDO, on the other hand, has its own problems. Perhaps the most serious one arises from the fact that futuristic qualitative requirements (QRs) require access to frontier technologies that are not acquirable by import because of regimes that deny such technologies on the argument of ‘end-use’. Indigenous development of such technologies invariably takes time. To forestall the obsolescence resulting from these delays, QRs are updated leading in turn to further delays.
  3. Periodic imports will remain advantageous for maintaining force levels and infusing new technology.
  4. Instead of attempting 100% self sufficiency, it is better to ensure product support throughout service life by appropriate clauses in contracts that are underwritten by assurances at Government to Government level, as recent contracts have done.
  5. Indeed, the ‘technology control regimes’ of supplier countries aim to achieve this and keep recipient countries dependant on them.
  6. Defence News of June 2002
  7. The evolution, the unusual combination of circumstances and the fruition of the APSOH sonar project has been discussed in the Navy’s history titled “Transition to Eminence” published in 2004.
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