Defence Industry

Towards a Sustainable Defence Industry
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Issue Courtesy: Uday India | Date : 06 Jan , 2017

Last fortnight, this magazine, and digital newspaper Bharat Niti, organised, in association with Associated Chambers of Commerce and Industry of India (ASSOCHAM) a national conference on Defence Production: Self Reliance and Beyond”. Addressed by Union Home Minister Rajnath Singh and Defence minister Manohar Parrikar, the conference was attended by the top industry leaders (both Indian and foreign), bureaucrats and defence analysts.

I was really impressed when a participant pointed out that it would have been much better if the title-theme would have been “a sustainable defence industry” instead of “self reliance in defence production.” Though he did not elaborate on the point he made, I think there is a merit in what he said. All told, given the nature of the defence industry, no country in the world can become self-reliant. In fact, later in his speech defence minister Parrikar also talked on the similar line. What we need is that we should be as self-reliant as possible with regard to arms and ammunitions. More important is the reliable supply of defence items, be it indigenous or foreign, at a cheaper price and in time. And the best way to ensure this happening in this globalised world is to strengthen the indigenous base by involving the private sector and simultaneously having strategic linkage with foreign firms for joint development and joint productions of arms in India that will not only cater to the domestic needs but also promote their exports to the rest of the world. In other words, India must have a globally competitive defence industry.

It may be noted here that not long before he left this mortal world, former President A P J Abdul Kalam had stressed the importance of having a long-term defence strategy and vision for defence industry growth. He was keen on India establishing a military-industrial complex involving large private industries.  “The need of the hour is to establish a military-industry complex (MIC) at the national level enlisting large and medium industries to be partners along with defence PSUs (public sector units) as its members,” Kalam had said in May 2015. However, a MIC for Kalam was not collaboration simply between Indian PSUs and Indian corporate houses. “Encouraging high technology tie-ups and joint ventures between Indian and other global defence industries will achieve not only competitiveness but also envisage the product for export,” he had underlined.

In my considered view, the former President was bang on. MICs these days are getting increasingly globalised. Take, for instance, the case of the United States, the world’s foremost military power. Incidentally, the term “military industrial complex” was coined in the United States by President Dwight Eisenhower during the Cold War to welcome the emergence of what is said “the second era” of the American MIC. During the first era, which lasted from 1787 to 1941, the defence sector in the United States consisted totally of the government-owned arsenals and shipyards. However, with the United States participating in the World War II, President Franklin Roosevelt established the   “War Production Board” by conscripting the major private industries, particularly those in the automobile sector, into wartime service. But after the War ended, not only these private companies, such as Boeing and General Motors stayed and consolidated their involvement in the military sector, but they were also joined by others like AT&T, General Electric and IBM. One of the important features of this second era was that the Pentagon financed the private sector, which, in turn, created world class technologies that were for use by not only the military but also by the ordinary citizens. One can cite in this regard the examples of drone, night vision goggles, GPS in cars, and what is most important, the Internet.

The end of the Cold War in the 1990s saw the emergence of the “third era” (and this is prevailing at the moment), whose important features are as follows. First, the industry shifted from diversified conglomerates and was managed by defence-only firms. Secondly, the contribution of the Pentagon, both financially and technologically, has been declining, thanks to the shrinking defence budgets. As a result, and this is the third feature, the American MICs are increasingly buying commercial technologies (either buying or giving these technology providers shares) such as cloud computing, cyber security, nanotechnology and even smart phones. Just see how Google acquired Boston Dynamics that had created BigDog, a four-legged robot that can support soldiers in rough terrain.

However, these features are increasingly proving insufficient to sustain the US defence industry. Though it is courting commercial companies, it only prefers the American ones. It is not globalizing itself properly, shunning the option of coproducing products abroad with allies and friends the way the Japanese and Koreans are developing their technologies and manufacturing brands in foreign countries, from where they are exporting them to various parts of the world. America’s F-35 example, by distributing the burden of the development cost of the fifth generation fighter plane with some NATO allies, is said to be not enough.

No wonder why William J Lynn III, a former US Deputy Secretary of Defence, argues for starting a new fourth era in which the Pentagon must take a more active role in recruiting outside companies, “keeping in mind that their futures are inextricably intertwined”. According to him, “The United States has the opportunity to look beyond its borders to turn this fourth era to its advantage.

Since World War II, the country’s technological advantages have protected its national security. To maintain that advantage, the United States must adapt to – and ultimately embrace – the trends that will come to define its future”.

Can India fit into this scheme of things, particularly when Prime Minister Narendra Modi’s much repeated calls for “Make in India” programme continues to remain in the headlines?  Can Kalam’s thesis that “Encouraging high technology tie-ups and joint ventures between Indian and other global defence industries will achieve not only competitiveness but also envisage the product for export” bring in the India-US joint development of defence products? Well, the Americans think so, evident from India and the United States signing last fortnight the much talked about “major defence partner” agreement, facilitating trade and technology exchange, which will go a long way in joint collaborations and joint products and their eventual exports.

Importantly, both Prime Minister Modi and Defence Minister Parrikar have been talking of making India cater to the needs of the global market. In other words, from being the world’s largest importer of arms, India should transform itself in such a manner that it will be a major exporter of arms. Parrikar says that “India can export LCA aircraft like Tejas, Akash and Brahmos missiles after meeting the 90 percent demands of our own forces.” It may be noted here that while many DRDO products may not be up to the expectations of our forces, they can meet the expectations elsewhere outside the country and can be easily exported. There is the example of the Pinaka missiles (rejected by our armed forces), which are in demand in countries of West Asia. Even otherwise, there are demands for our Brahmos and Akash missiles, small arms and many other products.

As has been pointed out, India is the world’s largest importer of arms. China is also a big importer of arms; in fact, it is the fourth largest. But China is a big exporter of arms, too, at the same time. The latest estimate says that China has replaced Great Britain as the world’s fifth largest exporter of arms. That bulk of the Chinese arms supplies goes to Pakistan is a different matter altogether. The point is that while importing arms is unavoidable in the life of a nation while developing, the real strength in the ultimate analysis will come from a sound indigenous defence base, which, apart from working towards self-sufficiency or self-reliance in arms, generates wealth for national exchequer by exporting some of its products.

Of course, it is too early to say what impact the decision to export arms will make on the potential arms-buyers. That will be known when Indian companies get concrete orders from abroad for our indigenously designed military hardware. The usual criticism of the functioning of our Defence Research and Development Organisation (DRDO), the premier R&D organization of the country that works on various areas of military technology to qualitatively address needs of Indian defence system, is that it promises more but delivers less and that while designing the products it does not take into account the views and concerns of the end-users, that is, the Indian military. That India still imports nearly 70 percent of its defence needs means that the DRDO and other defence public sector undertakings have not been able to overcome serious challenges that inhibit their growth and effectiveness.

And it is precisely here that the need arises for a comprehensive development of the defence industry by involving the private players from within the country and abroad. Our seminar dealt with this theme. We have presented in this issue of our magazine some of the thoughts that were expressed in the seminar. Hope you will enjoy reading them.

Courtesy: http://udayindia.in/2016/12/29/towards-a-sustainable-defence-industry/

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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

Prakash Nanda

is a journalist and editorial consultant for Indian Defence Review. He is also the author of “Rediscovering Asia: Evolution of India’s Look-East Policy.”

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