Indian Defence Review

Enough of problem stating, finger pointing and nay saying. What is of interest is that can things be set right and if so how? How long will it take and what are the solutions? The situation can only improve with initiative from the political leadership. Innumerable studies and reports have resulted in only cosmetic improvements and there has been minimal overall impact. Will this article be yet another rant with business continuing as usual? Probably yes, unless this article and many more similar ones can generate public outcry and demands for action which the government will be forced to take note of. In case the citizenry chooses to be mute spectators, we may leave a curse upon our children, should war threaten our progeny in the future.

To supplement what has been stated by various learned personalities in the past, a few new ‘out of the box’ suggestions are offered below. It is generally true that personal and direct military knowledge of power centres such as the Prime Minister, the Defence Minister and the Defence Secretary is inadequate. They need personal military advisors on their secretarial staff. No amount of advice from the Service Chiefs, the Services Headquarters or the Integrated Defence Staff can substitute for such advisors who have the confidence and the ear of these appointments. A recent example will highlight the important role such advisors can play. In context of the ‘One Rank One Pension’ agitation, the Defence Minister whilst announcing the acceptance of the demand, made a mention of a non-existent Voluntary Retirement Scheme. Some clueless or more likely a mischievous bureaucrat introduced this ‘red herring’, which would never have been there had the announcement text been vetted by a military advisor. The government would have been spared the blushes and the ex-servicemen, the anguish.

Similarly, the Prime Minister will be much better educated on the nuances of ‘Make in India’ for military hardware if a military expert is in the Prime Minister’s Office (PMO) to advise him in person. The Parliamentary Standing Committee for Defence should also have a military member-secretary to follow-up and monitor the comments of the Committee with the MoD or other ministries. The National Security Advisor too is devoid of decent military advice. By mandate, one Deputy NSA should be a respected, retired military man.

If the above sounds like militarisation of civilian structures, the response is that modern democracies such as USA already have similar and more military advisers on the personal staff of the White House, the Secretary of Defence and some other functionaries. The above covers the decision making levels. To improve military advice at the working and functional level, a system of a military interns working on staff of joint secretaries in the MoD will be very helpful. Before moving on, it is important to dispel the notion that the above aims at creating more and needless vacancies in the already bloated higher ranks. The simple answer is that even with the above; our military staff outside the services will still be a miniscule percentage of what countries such as USA, UK, China or Germany have.

The MoD is the single largest budget holder in the government but there is absolute lack of debate on allocations and accountability. Presentation of the defence budget and a debate on it should be a separate part of the Union Budget. Till the time the parliament sits on greater judgment on funds required for defence and questions how it is being spent, the MoD and Finance Ministry will continue to wallow in status quo and lack of accountability.

Money makes the mare go. It is not possible to maintain modern and effective armed forces without matching fiscal commitment. The Indian armed forces are the second largest in numbers. Yet our defence budget is a paltry $45 billion. Compare this to USA at a massive $650 billion. Even much smaller forces have larger budgets. Well, some of the disparity can be explained by higher wages and costs in Western countries, but how about some rough comparison with China? To make matters worse, less than 30 per cent of our budget is for capital expenditure or capability building. Our Army in particular is far too large to be sustained by the financial support the nation has been providing. Since revenue expenditure cannot be reduced, it is the capital budget that takes the hit. Consequently, obsolescence and hollowness sets in.

Defence budgeting and spending is a very intricate web. It is often correctly stated, “You don’t even spend what is allocated, so why ask for more?” The question should rightly be answered by the RM and the Defence Secretary who sanction more than 80 per cent of the Capital and Revenue expenditure. By design or default, our obsolescence and hollowness are more as a consequence of slow decision making rather than the budgetary allocation. But the converse is also true. The government’s commitments are no directive to the Finance Ministry. The UPA sanctioned the Mountain Strike Corps despite the vehement objections of the then Finance Minister in the Cabinet Committee on Security (CCS). But that gentleman and his successor have made sure that no allocation is made, even though approved by the CCS. This is how the government works. This is the sanctity of the decisions of the CCS.

Equally disturbing is the larger-than-life role arrogated to itself by Defence Finance. This branch of the MoD is a law unto itself. They have habitually overstepped their brief and become virtual decision makers on all defence procurements. The solution lies in treating the Defence Finance for what they are – ‘Advisors’ only. If the Service Headquarters and various ranks of bureaucrats have to be true to their salt, they must overrule Defence Finance when the interests of the forces so require. It has been done and can be done.

Maintenance of the armed forces is the responsibility of the nation, more specifically, the government of the day. Armed forces exist for the nation and not as self-serving entities, as some may want us to believe. If the government cannot maintain the forces in the shape and size decided by itself, down size, right size or whatever but do not have hollow Goliaths. They are worse than muscular midgets. Unfortunately, our forces are the former today. You cannot thump a 56-inch chest and yet have an Army with 80 per cent obsolescent equipment, an Air Force down to 34 squadrons instead of 42 and a Navy with more ships and submarines due to retire then are coming in.

The traditional allocation to the defence budget at well under two per cent (1.73 per cent in the last fiscal) cannot support the Indian Armed Forces. To set things right, over the next ten years, an allocation closer to three per cent of the GDP will be required. It may stabilize at around 2.5 per cent subsequently. However, concurrently the sources of supply and the decision makers have to be on the ball to spend the money; otherwise history will keep repeating itself.

In the beginning, a mention was made of the criticality of the Civilian Defence eco-system in maintaining a strong military capability. The Indian Armed Forces continue to be dependent on import sources for most major equipment. Some of it has been manufactured under license or Transfer of Technology (ToT) in India. Our domestic industry continues to manufacture low-tech equipment. India’s domestic defence industry is largely in the public sector and is dominated by the Ordnance Factories Board (OFB) with its 41 factories nationwide and the nine Defence Public Sector Undertakings (DPSUs). These are tightly controlled by the Department of Defence Production. The private sector has so far been a fringe player with some of the more prominent companies being Larsen and Toubro (L&T), Tata Motors and Ashok Leyland. Lately, some large businesses have established defence related companies, more on which later.

The OFB, with an annual turnover of Rs 11,500 crore, manufacture the widest range of equipment -from tanks and guns to socks and boots. It functions more or less like a government department with all the financials looked after by the government, directly or indirectly. It is generally an inefficient organisation with little accountability to the buyer (Armed Forces). OFBs have monopoly on any product they manufacture and the Armed Forces are obliged to buy all the products from them only. No tendering, no competition and no price negotiations. To compensate for inefficiencies inherent in this model, they often sell goods at much higher than market prices and even higher than those offered by foreign sources. This model had fair utility till the last century but now needs to be drastically revamped and run like a commercial enterprise.

Amongst the DPSUs, Hindustan Aeronautics Limited (HAL) manufactures aircraft, the four shipyards manufacture naval vessels of various kinds and some others manufacture electronic items, missiles, heavy vehicles and special metals. The DPSUs have more accountability than OFB, are relatively more professional, but being semi-monopolistic, owe very little accountability to the forces. Almost all foreign designed equipment manufactured in India is in the domain of OFB or DPSUs. The forces have almost similar problems with DPSUs as with the OFB. These undertakings need to be made more competitive and be almost like any private sector entity.

The private sector has not grown primarily because of government policies that persist with the OFB and DPSUs. Tatas and Ashok Leyland have supplied wheeled vehicles; L&T is into relatively higher technology products like rockets and naval equipment but little else. In the last year or so, there has been frantic activity in the relatively larger business houses to get on to the defence manufacturing bandwagon. Prime Minister Modi’s ‘Make in India’ campaign has given good hope to these enterprises. This is a good sign, but a lot of this initial euphoria is misplaced. Till such time these entities become financially and technologically somewhat as capable as American defence contractors, they will not see much business and will end up being the sister versions of OFB and DPSUs, by importing technologies and manufacturing on a tender to tender basis. There are no shortcuts for these companies. They will have to struggle for the next ten years or so. There is a lot of fog out there and only time will tell how the present new-found enthusiasm ultimately pans out.

The best approach for the next decade is to make the OFB and DPSUs more competitive, reduce government control and concurrently encourage and enable the private sector, gradually. This incremental approach will provide good business to the private sector, expose them to the rigid standards of defence manufacturing, develop a trained manpower pool outside the OFB/DPSUs and gradually pave the way for the private sector to start manufacturing full equipment. The present approach of directly buying major equipment as a whole from inexperienced private entities is fraught with serious implications in the long run.

It would by now be apparent to the reader that national military capability involves much more than the armed forces. Of course, the military is at the cutting edge of this capability, but it is only as good as the government and the defence industry supporting it. The Indian Armed Forces have delivered splendidly despite less than enthusiastic support of the government and the production agencies controlled by it. That the frontline soldier has made do with what he has is a tribute to the youth of this country.

The Indian Armed Forces, largely insulated from public scrutiny because of their stature and lack of public awareness of matters military, also have a lot of soul searching to do. After laying bare the deficiencies in the government and the military industrial complex, it is only fair and just that the inadequacies within the armed forces are brought out equally dispassionately.

No country has become a regional or global power without the ability to project military power in the region or across the globe. The Navy and the Air Force are major players in developing this capability. India’s land centric or continental fixation has created a very large Army which continues to grow. The Navy and the Air Force are much smaller and in their present size and shape, cannot support the nation’s long term ambitions. India must expeditiously rebalance the mass of its three Services. The Navy and the Air Force must grow and get much larger allocations of the Capital Budget. Their manpower ceilings also need to be raised.

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Heretical as it may sound, the Indian Army needs to downsize and become more mobile and firepower intensive. Whereas our land border commitments are real and unique, there is considerable scope to accomplish the assigned tasks, as well if not better, with less manpower and more firepower. There needs to be a debate on assigning more responsibility to our border management forces during war, thus relieving the Army from holding the line in areas where possible. The thrust of our Army of the future has to be on greater mobility and firepower, with lesser manpower for all its combat units and formations. To conclude, it is important to reassure the reader that the purpose of this article is not to spread alarm or show certain agencies in poor light. The aim is to give a true picture so that the citizens are better informed about our actual military capabilities. As they say; understanding the problem is half the solution.