Defence Industry

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Issue Courtesy: Uday India | Date : 14 Oct , 2022

The Indian government expects the 12th edition of DefExpo, which is being held from the 18th to 22nd of October at Gandhinagar, Gujarat, to be “the largest ever’ since the inception of the event in 1999. It was earlier scheduled to be held from the 10th to 14th of March at the same venue but, in an abrupt move, the exhibition was postponed at the last minute on the grounds that the participants were ‘experiencing problems related to logistics’ in the wake of the Russian invasion of Ukraine.

The government also claims that DefExpo-2022 is set to resonate India’s ‘Path To Pride’. After all, defence exhibitions in India do provide modest opportunities to the participating companies to showcase their products and capabilities to the prospective business partners and buyers. These exhibitions are also known for a flurry of seminars, business networking events, and interactive sessions with the central and state ministers and officials.

In fact, as has been pointed out by veteran defence-watcher Amit Cowshish, who also had worked as the Financial Advisor to the Ministry of Defence (MoD), the postponed March exhibition, Defence Exhibition Organisation (DEO) had planned to organise seminars themed on exports, future of civil aviation in India, defence research and development, future conflicts, aero engine manufacturing in India, local potential for carrying out MRO (maintenance, repair and overhaul) of aircrafts and other platforms, and the opportunities offered by the state governments for investment. It was expected that domestic and international companies and their associations, think tanks, and the local and international media would participate in these events, apart from the officials of MoD and other ministries like Home Affairs which controls the paramilitary forces and civil aviation, and the state governments would participate in various events. Hopefully, these activities will be noticed in the rescheduled event at Gandhinagar as well.

A word about the history of defence exhibitions in India will be in order here. The DEO in the MoD was created in 1981 for the promotion of defence oriented products and services, developed and manufactured by the defence public sector. For that purpose, a permanent defence exhibition is maintained at the Defence Pavilion, PragatiMaidan, New Delhi. MoD has been organising Aero India shows since 1997. However, initially the DefExpos were principally organized by industry bodies like the Confederation of Indian Industry. But in 2008, the MoD decided to take control of DefExpo itself. DEO has since been designated the nodal agency to organise and coordinate both Aero India and DefExpo.

Till February 2014, DefExpo was always held at New Delhi. It moved out of New Delhi for the first time in March 2016. Goa, the state of the then Defence Minister  Manohar Parrikar, was selected as the venue. DefExpo 2018 was held near Chennai in Tamil Nadu when Mrs. Nirmala Sitharaman, a Tamilian, was the defence Minister.  Lucknow, from where present Defence Minister Rajnath Singh has been elected to Parliament, was the  chosen venue of the DefExpo 2020. Now that this edition of the DefExpo, 12th in the series, is being held in Gandhinagar, one can say that the trend of holding the event in the home states of the Defence Ministers has broken, although one can argue that Gujarat is the home state of the Prime Minister.

Be that as it may, DefExpo-2022 is said to be symbolic of India’s resolve to further its “Business interests and take global initiatives towards furthering peace and security in the region”. It is also in accordance with Prime Minister Narendra Modi’s resolve towards  ‘Atma-Nirbharta (self reliance)  in Defence”.  At a recent webinar, Prime Minister Modi said, “ The basic principle of security is that you should have your own customized and unique system, only then it will help you. If 10 countries have the same type of defence equipment, then your armies will have no uniqueness. There can be uniqueness and surprise elements only if the equipment are developed in your own country.”

On another occasion, Modi had also said,  “Our defence manufacturing was very powerful even during the period of servitude and immediately after independence. Weapons made in India played a big role in the Second World War. Although this strength of ours kept on weakening in the later years, it shows that there was never a shortage of capacity in India then and there is no shortage even now.

“The basic principle of security is that you should have your own customized and unique system, only then it will help you. If 10 countries have the same type of defence equipment, then your armies will have no uniqueness. There can be uniqueness and surprise elements only if the equipment are developed in your own country. “

Keeping this view in mind, this year’s budget had a blueprint for developing a vibrant ecosystem from research, design and development to manufacturing (defence equipment) within the country. About 70 percent of the defence budget has been earmarked for the domestic industry only. Accordingly, the Defence Ministry has released the Positive Indigenization List of hundreds of  defence platforms and equipment. 25 (twenty-five) percent of the Defence R&D budget has been set aside for industry, start-ups and academia so that the private sector should also come on par with DRDO and defence PSUs. A Special Purpose Vehicle Model has also been proposed in the budget. This will establish the role of the private industry as a partner beyond just a vendor or supplier.

To quote Modi again, “ When we import weapons, its process is so long that many of them become outdated by the time they reach our security forces. Its solution also lies in the AtmaNirbhar Bharat campaign and Make in India. I would also appreciate the armed forces of the country for making very important decisions, keeping in mind the importance of India’s self-reliance in the defence sector. The confidence and pride of our defence forces swell high when they have indigenous equipment.“

The Prime Minister is right when he says that there has been a change in the way the wars were fought in earlier times and now. Earlier, it used to take decades to modify the equipment of war, but today modification happens in no time. It hardly takes time for the weapons to become outdated now. Modern technology-based weapons become outdated even more quickly.

Similarly, there is stiff competition that exists in the defence sector. Earlier in India, there used to be various allegations while procuring arms and equipment from foreign-based companies. Every purchase was mired in controversy. Due to the competition between different manufacturers, there is a continuous campaign to degrade the products of rivals. As a result, confusion and apprehensions arise and there is room for corruption. A lot of confusion is created regarding weapons whether they are good or bad, useful for us or not. It is done in a planned way. It is part of the battle in the corporate world. That is why Modi says rightly that “We get solutions to many such problems from the AatmaNirbhar Bharat campaign.”

The government is saying that the campaign is yielding results. It has created seven new Defence Public Undertakings. The defence-exports have increased  by six times in the last five-six years. India is now said to be providing Made-in-India defence equipment and services to more than 75 countries. As a result of the government’s encouragement to the Make in India, more than 350 new industrial licenses have been issued for defence manufacturing in the last seven years, whereas in the 14 years from 2001 to 2014, only 200 licenses were issued.

All these are fine. But as DefExpo is a trade-oriented initiative, its success ought to be measured in terms of the volume of business generated. However, all the previous editions of the DefExpo have not really revealed such details. The exhibitions before always claimed a number of bilateral government-to-government meetings and MoUs on defence undertakings and business. But rarely do they fructify in reality.

Similarly, though the primary object of a DefExpo is to showcase Indian products for exports, invariably we end up deciding to buy more and more foreign equipment because of their modernity and technological superiority. In other words, defence exhibitions do not promote exports but have provided

platforms for foreign manufacturers to hard sell their latest products. Increasing foreign participation is cited as a proof of the success of the event. In that sense, our DefExpo- events are to facilitate the export of all the participating countries, not India alone.

It is true that the Modi-government has been more sincere than its predecessors in promoting Indian products. But still the system or the ecosystem of defence production has many areas to improve on.

Broadly speaking, India’s Defence Industrial Policy (DIP) has so far been marked by three principal features. First, India intends to maximize its indigenous production through its own efforts – quality personnel/ scientists/ technologists and production centers. Second, if indigenously not feasible then the country will go for licensed production of what could be obtained abroad. This obviously involves transfer of technology from the foreign vendors so that over the years the country gains required knowledge and expertise to develop arms on its own. Third, if the situation warrants then the country will for direct purchases. But it has so happened that the third feature has over- dominated the DIP as a whole.

The most fundamental flaw in our DIP is that we have not spent enough on our research and development (R&D). It is very easy to criticize the DRDO, but the fact remains that the DRDO’s share in our defence budgets is not much to talk about if one compares the sums that the major arms exporters invest in R&D. Our brightest students do not go for R&D. There is a tremendous shortage of qualified engineers and scientists in our defence sector. And this explains why the second feature of our DIP is equally poor. You may frame enough provisions or rules for technology transfer and offsets with regard to the foreign vendors. But what use are they if you fail to utilize them because of the essentially faulty personnel policy?

It is of course true that, and it deserves praises, this year twenty-five percent of the Defence R&D budget has been set aside for industry, start-ups and academia so that the private sector should also be on par with DRDO and defence PSUs. A Special Purpose Vehicle Model has also been proposed in the budget. This will establish the role of the private industry as a partner beyond just a vendor or supplier. All this may not be enough, but at least it is good that a path has been paved.

Whatever one may say, the sad reality is that no foreign vendors or original equipment manufacturers (OEM) will like to part with their intellectual property rights; even if they want to, their respective governments will not allow that to happen all that easily. That precisely is the reason why we have taken an inordinately long time to develop the Tejas.

All told,  it is to be learnt from the examples in the major arms-exporting countries that defence technology often involves long term investment as obsolescence here is high. The production of the next generation of an equipment or of a different variant always increases the cost of the equipment, involving, as it does, the integration of various sub –systems. Similarly, you cannot expect your indigenous products to be as good as, let alone superior to, the similar foreign products that are available in the international market. After all, making arms indigenously is a learning curve. China is exactly undergoing this process. Its home-made weapons are qualitatively inferior to foreign products. But the important point is that it is one the right course. China-made weapons will be infinitely better in 10 years hence because China is climbing up that curve.

Of course, India is not China. Ours is a mixed economy, a fact which should have added to our strength. Because, unlike in China, our challenge can be met by a partnership between the public and private sectors. Unfortunately, the government in the past did not encourage the participation of the private industry in the defence sector. But things are changing now. The private industries are all unanimous in joining hands with the Indian government and public sector undertakings to build “together” a “globalized military industry” in India  for not only India but also the whole world.

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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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