Military & Aerospace

Road Ahead for the New Defence Minister
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Issue Net Edition | Date : 10 Sep , 2017

Nirmala Sitharaman, Defence Minister of India

Mr. Narendra Modi has removed the glass ceiling for women, by appointing Nirmala Sitharaman, as the full time Cabinet Minister for the Defence. This would certainly buttress the position of women in the Union Cabinet, as two of them would be in the Cabinet Committee on Security (CCS); and the third in charge of showcasing the achievements of the government as Cabinet Minister, I&B. This reminds one of David Ben-Gurion, the first Israeli Prime Minister, who chose Golda Meir to be a Minster. Asked about this move in a conservative male chauvinistic country like Israeli, David Ben-Gurion had famously quipped: “She is the only man in my government”. Modi’s chemistry with the Israelis is thus understandable!

Sitharaman’s task is cut out, as she has to contend with a vast ministry, where the major stakeholders like the Service HQs, DPSUs, DRDO & the MoD Civilians are often at cross purpose. It is not uncommon to observe the Services being fairly obstreperous about the slow pace of modernization of the services; often laying the blame on the civilian mandarins in the MoD who are the helm of policy making in the South Block. Infact, the Kargil Committee Report (1999) had observed that “the professional heads of the three services have not been accorded status nor granted power in the edifice of the GOI”.

After creation of Integrated Defence Service and CISC (2001), the capital acquisition proposals are examined indepth by IDS and then by Defence Acquisition Council, chaired the RM, the Service Chiefs and other Civilian Secretaries. Yet the Service Chiefs often crib that they are victims of a dilatory process and procedure; frustrating timely acquisition. The other two major areas where there are major concerns in MoD are tardy progress in participation of private sector players in defence production and near stagnancy in our indigenization quotient. Ms. Sitharaman has to, therefore, contend with three major challenges viz. how to bolster our modernization process, improve the level of indigenous content and create an enabling environment for a real level playing field for the private sector players.

Modernization of the Services

The defence ministry took a decision in 2007-08 that the capital acquisition quotient in the defence budget should be increased to 30% from the earlier 25%, which should be ramped up further to 40%. Most of the developed countries spend close to 60% of their defence budget on modernization. Sadly the capital expenditure as a % of defence expenditure has been showing a decelerating trend as the following figure would show.

Figure 1: Trend of capital expenditure as % defence expenditure (Source: Defence Service Estimates)

The problem is further compounded by persistent surrender of funds; drawing flak from the Standing Committee on Defence. The position on utilization of capital budget is represented in Table-1 below.

It would thus be seen that the surrender last year was more than a $1 Billion. Such surrenders was been the general pattern, with Army being a major defaulter. The delay in acquisition of 155mm howitzer guns after the Bofors scandal has left its bitter trail in army acquisition. The Kargil Committee had drawn attention to the basic needs of the army for “equipping infantry men with superior light weight weapons, equipments and clothing”. Even the IAF has also been surrendering funds in recent years due to inordinate delay in finalization of contract with Rafale, France for fighter aircrafts, which was fact tracked by Mr. Modi.

Table 1: Budget utilization by the services (Rs. Crore) (Source: Defence Services Estimates)

The defence ministry has a detailed acquisition procedure which tries to balance between highest standards of probity and transparency with expeditious procurement. Self reliance has been identified as a major cornerstone of our acquisition policy and Make-in-India is a focal policy. Enhancing the role of MSMEs is part of this mosaic. The experience so far has been that the time lines laid out for acquisition are being severely flouted. This is because of long drawn debates as to whether to categorize a requirement as “Make” or go for a “Buy” (Import) or Buy (Technology) & Make option. Often the Make decision gets a short shrift as the indigenous capability to design & develop and eventually produce “state of the art” equipments is long drawn, warranting the services to push either for “outright buy” or acquire technology and then productionise them. Presently the defence PSUs & OFs are recipient of technology from OEMs. The other major inhibiting factor is the undue delay that takes place in trials conducted by the services. Besides, the time taken by the defence PSUs in absorbing technology and delivering system as per promised delivery lines are also extremely unsatisfactory.

Allocation Concerns

The services clamour for higher allocation of the GDP towards defence, i.e. around 3%. As the following table would show, the share of the services to GDP hover around 2.1% – 2.3% over the years. This is not majorly different from defence expenditure globally, which is around 2.5% of the world GDP. all the same, this should be an area of attention for the new RM.

Table 2: Allocation & % to GDP & CGE (Source: Budget Paper )

As per the SIPRI report (2016) the total world military expenditure has been of the order of $1.67 trillion, with continent wise breakup, as Table-3:

It would thus be seen that USA accounts for nearly 40% of the global military expenditure. They also earmark 60% of global R&D on defence, to develop state of art weapons and systems.

Table 3: World Military Spending ($B) (Source: SIPRI 2011)

What is, however, most disconcerting is that India is the major global importer of arms accounting for 14%.

The table-4 below would show the position of countries in terms of arms exports and imports.

Improving Self Reliance Index

This takes us to the indigenization challenge in defence capability where our self reliance index remains at 30%.

Table 4: Main Exporters and Importers of Major Weapons (2011-15) (Source: SIPRI Yearbook (2016))

A committee under Dr. APJ Kalam in 1993 had recommended that our self reliance index should improve from 30% to around 70% by 2005. It had identified the critical technology areas where we need to invest in like Focal Plane Array Seeker for the missiles, stealth technology for aircraft, AESA radars for surveillance system and single crystal blades for manufacturing the turbine blades of aero-engineers. The thrust was to make good our critical gaps in subsystems like propulsion, sensors and state of art weapon systems like air-to-air missiles. The performance of DRDO in designing these subsystems, particularly in the area of gas turbine engines, carbon fibers, air to air missiles, radars and micro electronics, remain very disappointing.

Privatization

It is indeed a challenge as the Defence Ministry ushered in liberalization in 2001, by allowing 20% FDI and full private sector participation. The FDI limit was subsequently increased to the present level of 49%. However, defence sector come in trickles as the foreign OEM and the design houses look for a majority stake, for forging long term partnership, bringing in key technology and improving their export foot print globally. This is not happening. Ms. Sitharaman is well known for her advocacy of increasing FDI in defence beyond 50% as the commerce minister. She will have to now muster all skills at her command to shepherd a further liberalized FDI policy into the defence. This is a long awaited reform which will rev up the process of Make-in-India through long term partnership between India and foreign players.

Institutional Improvements

The Kargil Committee had recommended creation of a CDS (Chief of Defence Staff) post, as a single point military advice to the defence minister. There has been considerable discomfiture to implement this, as it will have significant implication on the civil military relationship, and even inter-service squabbling. The Shekatkar Committee (2017) has out a detailed report on this reiterating the GOM recommendation. Ms. Sitharaman should be careful before going ahead on these recommendations.

The other reports she should look at are the Sisodia Committee Report (2010) where the suggestion was to go for the DGA type model in France, in India. This would essentially bring design development, acquisition and production under one umbrella. The Rama Rao Committee (2009) had recommended that the design agency should work under production agency and that there should be better coordination between the DRDo and the Services regarding their operational requirement. This is indeed a very vexatious issue, as the DRDO has often worked with a silo mentality, which has seriously handicapped the engine development programme for the LCA, warranting an imported USA engine for an indigenous aircraft. This is an area which should catch her attention.

Strategic Partnership

The Dhrindra Singh Committee (2015) has been at the forefront to actualize Mr. Modi’s mission of higher private sector involvement in the defence sector. The strategic partnership model is an offshoot of this vision. Presently, the defence PSUs are the singular beneficiary of technology in various areas like aerospace and ship building sectors. They also play a critical role in integrating the subsystems. Major private sector players like the Tatas, L&T, M&M are very keen to get into these sectors, Tatas for UAVs and helicopters, L&T in ship building and M&M in the area of armoured vehicles. Ensuring that the strategic partnership model with the private sector players gets off ground should be the thrust area for Ms. Sitharaman. As of now, of OPVs and IPVs shipyards like Pipav, ABG & L&T. They would like an enlargement in their role in building frigates and submarines. Similarly helicopters and armed helicopter are other areas where public sector monopoly of the HAL could be busted with healthy competition from the private sector. This would also enhance our export potential. The clothing group of factories is a cesspool of inefficiency and high cost. The PM Nair Committee had strongly recommended that these low skill areas should be privatized. This should engage the new defence minister’s attention, though she wil have to contend with the back last from the unions in ordnance factories.

Concluding Thoughts

With the induction of a woman Cabinet Minister, she will have to contend with an ingrained gender bias which the Army is famous for. The clamour for women for Permanent Commission and in a combat role should be high on her agenda. The women IPS officers like Kiran Bedi have broken the glass ceiling in the role of women in operational challenges. The obduracy that is prevalent today amongst the defence services must go.

Fortunately the presently government is not mired by any corruption scandals in the defence sector so far. Ms. Sitharaman’s impeccable reputation in terms of honesty and sincerity should come in handy. She should try to put to action recommendations of Lt. Gen. Shekatkar for a roll on budget for modernization, so that the unspent balance in capital budget does not get surrender as it has been happening. But she should ideally steer clear of positioning a Chief of Defence Staff. Her thrust should be how to hasten the process of modernization, privatization and indigenization. How she balances the contending position of major stakeholders who work at cross purposes would be keenly watershed. This will be beyond providing a level playing field in terms of gender equality in the defence sector!

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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

S.N. Misra

former Director DRDO and Joint Secretary – Aerospace, MOD

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One thought on “Road Ahead for the New Defence Minister

  1. She needs to bring in some legislative changes to these two rules: Government of India Allocation of Business Rules (AoB rules) and the Government of India Transaction of Business Rules (ToB rules) framed in 1961. As per these rules, the Service Chiefs have no locus standi in the structure of the GoI. These rules have turned our Service Chiefs into lowly outliers in the National security. Politicians neither have the time or acumen for national security. Hence, they have delegated it to the babus in MoD. The defense of the country is not under civilian authority, but under bureaucrats. Fix those two rules and give the Chiefs the status and power to carry out their responsibilities. Rest can wait.

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