Military & Aerospace

India’s Defence Industrial Complex
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Issue Vol. 29.4 Oct-Dec 2014 | Date : 19 Feb , 2015

View from the Other Side

It is interesting to interact with indigenous private industry, whose views after decades of neglect are significant and summarised as under:

Many attempts have been made in the past to reorganise the DRDO but little has improved…

Conflict of Interest: MOD – Department of Defence Production is set up for the DPSU and OFB and always ensures that orders are given to them on nomination; are the designated recipients of ToT; tax laws and benefits give them unfair advantage and the capital required is free. Unless there is a level playing field, the private sector will continue to struggle and there will be no serious ‘Made in India’ for decades to come.

Indian Product is Inferior: All the stakeholders including the user, bureaucracy, politicians or the omnipresent Agent, no one’s interest is served in the growth of local industry and all gang up in one way or the other to kill a promising company.

Offsets: A completely mishandled policy instrument. The objective was to create a military – industrial complex in India which inherently implies that defence technology ingress in the industry is a must. The persons/organisation responsible do not understand what technology is and do not have the foggiest idea as to what an industry roadmap ought to look like. The product, partner… everything is cast in stone for the next ten years of the program even before it starts. Take one look at the ‘approved’ Offset proposal and you see the point.

Procurement Delays: A proposal is never really made correctly, stances change with personalities and it is here that the problem arises.

Stalled Project: When the user team changes (DG/ADG/DDG…), the new person in charge will impose his thoughts (most of time mindlessly) on an approved and ongoing program and delays are bound to happen.

The DRDO’s job should be R&D and NOT production, commercialisation and money making…

On Balance: If this government cannot resolve the above, there is no future. What is required is calibrated steps keeping the DPP as the objective but meaningful DPP changes will only take place if they are directed accordingly.

Reorganising the Defence Industry

Going by media reports, a revamp of the DRDO (not DPSUs) is in the offing and a committee headed by Dr P Rama Rao is to implement the following recommendations made by it. One, nomination of Nodal Officers for structured interaction between the DRDO and Services; two, introduction of an IFA scheme for financial decentralisation; three, appointment of a dedicated Chief Controller for Human Resources (HR), and three, creation of Seven Technology Domain-based clusters headed by Director, restructuring of DRDO HQ, creation of Directorate of System Analysis and Modeling (SAM), Quality, Reliability and Safety (QR and S).

According to reports, efforts have also been made to increase budget for ‘Extramural Research’ as recommended by the Committee and that DRDO has initiated a note for approval of the Cabinet for: first, creation of an empowered Defence Technology Commission (DTC); second, creation of a commercial arm of DRDO; third, renaming of DG DRDO as Chairman DRDO, and fourth, creation of Senior Administrative Grade (SAG) posts along with 162 other posts for full-scale implementation of the IFA scheme.

Looking back, many attempts have been made in the past to reorganise the DRDO but little has improved because of various factors including deep rooted corruption (in sync with the Department of Defence Production) as is apparent from CAG reports. The main hindrance why we remain starved of technology is that the emphasis in DRDO was little on R&D, more on commercialisation, even grabbing projects without having the capability to develop the said technology or equipment and keep the private industry as far away as possible or at best permitting them ‘through DRDO’.

China also embarked upon a focused program of ‘reverse engineering’…

The CCS would also need to examine whether these recommendations by DRDO are in line with the Prime Minister’s idea of minimum establishment and maximum output. Where are the recommendations to cut the flab and stop wasting time on R&D and production of items like mosquitoes repellents? Most importantly, has the DRDO spelt out what objectives in what timeframe will actually be achieved with such restructuring – which should be necessary to any reorganisation? What and how will the private industry be dove-tailed with available dual use technologies optimised – as followed by China? How will the DRDO alter course beyond its decades old path of just system integration and technology assimilation, that too of dated technology? What is going to be the technical oversight over this expanded empire of the DRDO, with Secretary to GoI officers in the Chairman, DGs, plus SAG and 162 other posts?

Any sincere attempt to reorganise and increase the efficiency of DRDO would have required the military (end users) to be brought into various levels including at senior decision making levels in the DRDO, their inputs binding on DRDO with regards to technical parameters for weapons system being attempted for the respective Service. This is what China has precisely ensured. As the acronym suggests, the DRDO’s job should be R&D and NOT production, commercialisation and money making. The DRDO recommendations avoid this vital aspect. The requirement and concept should be to integrate the design (research), users and production agencies (both PSUs, OFs and private industry and shipyards for specific integrated missions with DRDO involved in focused R&D. The proposed DRDO reorganisation appears to have not been worked upon holistically taking all these issues into consideration. The age-old approach of keeping the users (military) away (just like the MoD) has overruled holistic considerations to actually improve the defence-industrial complex, bringing it in line with current and future requirements.

China adopted a series of policies to revamp the structures and operations of its defence procurement system…

In remodeling the defence-industrial complex, it would be prudent to draw lessons from what China has done, particularly how China remains focused on R&D especially in ‘niche’ technologies and how it has made technology a major driver of change. China is benefitting from her selective investments in Science and Technology undertaken by her Ministry of Science & Technology. Having sponsored higher education for her students abroad, China is benefitting from the ‘Reverse’ Brain Drain.

The contributions of the Chinese Academy of Sciences, Chinese Academy of Engineering and the work being undertaken in her universities is significant and China is fast emerging as an important source of scientific papers and patents and reflects her growing scientific prowess. From a global innovativeness ranking of 24 in 2004, China has jumped to the sixth position in 2009, and targets to be the fifth by 2020. China aims to attain technological parity with the US by 2040-2050.

In terms of arms exports, China has already become the fifth largest exporting nation with 55 per cent of her exports going to Pakistan. The Chinese military-industrial complex, the largest in Asia produces full range of military equipment, small arms to armoured vehicles, fighter aircraft, warships, submarines, drones, nuclear weapons and ballistic missiles. While reforms in the defence industry focused on re-organising the R&D, her industrial base was integrated with the civil sector and selectively absorbed foreign technology.

The National Defence Science, Technology and Industry Commission (NDSTIC) was made the coordinating body for both R&D as also for production and reports directly to the CMC’s National Defence Industries Committee, to break down barriers between the defence and the industry. The NDSTIC, through its various trading arms, coordinates the procurement of foreign technology. China also embarked upon a focused program of ‘reverse engineering’ absorbing foreign technology and innovating it into new weapon systems termed as ‘disruptive innovation’.

Most of the organisations in China’s military-industrial complex have both military and civilian R&D functions…

China adopted a series of policies to revamp the structures and operations of its defence procurement system and reform operations of the defence enterprises with the aim to centralise and standardise weapons procurement decisions while de-centralising defence-enterprise operations to increase initiative for efficiency, higher quality production and eventually innovation. As dual use technology, Chinese scientists are focused on robotics, nano technology, space systems, DEWS, nuclear engineering, lasers and optic-mechanics and materials. In terms of foreign technology, acquisition of key dual-use components, and indigenous R&D, China utilises a well-organised network to facilitate collection of sensitive information and export-controlled technology from US and EU.

Most of the organisations in China’s military-industrial complex have both military and civilian R&D functions. This network of government-affiliated companies and research institutes enables the PLA to access sensitive and dual-use technologies or knowledgeable experts under the guise of civilian R&D, even intelligence services and other illicit approaches disregarding international laws and export controls. The civil-military integration policy to develop an innovative dual-use technology and industrial base has served both military and civilian requirements as witnessed in fields such as advanced aviation and aerospace, source code, traveling wave tubes, night vision devices, monolithic microwave integrated circuits and information and cyber technologies.

For India, the urgent reorganisation of the MoD needs to be undertaken; it is important – not only for optimising the defence-industrial complex but also to leverage the defence of the country. It would be prudent to replace the MoD by a Department of Defence (DoD) staffed by military professionals with the DoD placed directly under the Prime Minister. Military (user) professionals must also be inducted at all levels of DRDO, DPSUs and OFs including at the managing and decision making levels. We must holistically review our defence technology roadmap with requisite focus on developing cutting edge technologies replete with plans to leapfrog technologies of the future.

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