Defense Industry - Powering Strategic Independence
By Lt Gen P R Shankar (retd)
A nation’s strategic independence is a sum of its political, economic and strategic independence. India attained its political independence in 1947. Economic independence was attained thereafter through self-sufficiency in agriculture and dairy products, progress in science and technology, successful space and nuclear programs and major structural reforms to become one of the leading global economies.
However, Independence in defence and security matters eludes India. Since, India remains dependent in most fields, except for missile systems, on either import of equipment or technology. The day India can attain self-sufficiency in the field of defence design, development and production, we would have attained strategic independence and be a world power.
On Independence, our Armed Forces inherited a large inventory of Second World War British origin defence equipment. We also inherited some production capability; mainly factories of Ordnance Factory Board and Ship Building Yards. We had no capability in design and development. For long, we were largely import dependent. Later, we shifted to import with licensed production viz Gnat aircraft, Vijayant Tanks and 7.62mm Self Loaded Rifles.
After the ‘71 war, we tilted decisively towards USSR. Major systems of the Indian Armed Forces were of Russian origin with minimal transfer of technology. Ever since the collapse of the Soviet Union, we have been forced to fend for ourselves. During this time our DRDO and defence production set up expanded.
However, it has not been enough to meet our expanding security needs. The private sector was kept almost completely out and hence remained stunted. As a result, India, despite being the sixth largest economy with a good industrial base remains one of the highest importers of defence equipment. This will continue for the next decade despite best effort and sustained results.
The realization has set in at all levels that we have to involve our Private sector in catering for our Security needs. A major push and opportunity are being given to our private Industry to participate in Defense programs through the Make in India platform. Considering that we have a large industrial base, the outlook is good, but it is nascent and needs nurturing. Indian Defense Industry must be made to grow to power us towards strategic independence. This needs further thought and discussion. Certain aspects which the Industry will do well to note are discussed in following paragraphs.
The industrial revolution bypassed India when we were under the British colonial rule. As a result, our industrial growth has been lopsided. Our industry has been more trading and service-oriented than being inventive and production oriented. This stems from our historic culture of India being a trading nation. Traders by nature have a very poor risk-taking ability. They invest only to seek profit.
In the field of defence design, development and production, there is a requirement to be able to take risks and view things on a long-term basis. Hence a culture shift is mandatory for those who enter the defence industry. They must develop to be inventive, to be able to take risks and invest accordingly. They need to develop a vision beyond the horizon. They need to understand that in the Defense Industry one has to get the process right. Profits will follow as sure as dawn comes.
Every industry caters to its market. Market success occurs only when market needs are known. Similarly, Defense Industry must gain knowledge in military matters - which is its sole market. They must be up to scratch in aspects relating to strategy, understand operational aspects and have a rudimentary knowledge of tactics. They need to know the environment in which Armed Forces operate and their requirements. They need to acquire special multidisciplinary technologies.
Interaction with the Armed forces in required depth and breadth is mandatory. At the end of the day, it must be understood that the Battle Field is a noisy, tough, dirty and bloody place where systems often fail. Defence equipment must survive and function in this environment. Indian industry must rise to meet this challenge.
Historically and otherwise, Indian industry has not been technologically savvy. It has not invested in research sufficiently. The Research investment levels of developed nations are far above ours. They own technology. Technology, when owned, is cheap and generates long-term profits. Technology which is borrowed or bought is prohibitively costly. Hence from all points of view, to be able to be self-sufficient and competitive, defence industry must invest more into the acquisition of knowledge and niche technologies. It must be more inventive in acquiring, adopting and exploiting dual-use technologies. To expand the knowledge bubble, the industry must adopt a multipath route.
Indian Industry needs to seek anchors in Indian research institutions. Primarily, DRDO must assist in the expansion of Defense Industry. DRDO must partner with the Industry and incubate new technologies in them through developmental projects. It is time the CSIR network, ISRO, DAE labs and other research areas are made to orient towards the Defense Industry. The defence industry associations like CII, FICCI and ASSOCHAM must take the lead in this realm and see to it that the knowledge resident in such institutions is available to the defence industry to grow.
Our academic institutions are places where phenomenal multidisciplinary research is going on. It is waiting to be tapped. IISc, IITs and leading Universities are great knowledge banks. They are now willing to reorient themselves towards defence projects. Defense Industry must tap this huge latent knowledge pool, build bridges to develop and produce state of art equipment for the Armed Forces in the long term.
Indian defence industry can stand on its feet only when it is technologically competent and self-sufficient. Of course, it can acquire technical knowledge through foreign collaboration. Foreign collaboration can be achieved through joint ventures, becoming offset partners or even adopting a consortium approach. The price to pay will, however, be greater. For the short term, this approach is ok.
Defense Industry must be multi-tiered in the long run. We need to have a bouquet of multi-product business houses, large-scale integrators, niche product units and import substitution producers coming into the fray at each tier appropriately. Very importantly, the defence industry needs to cater not only to our national needs but also start exporting to friendly foreign countries.
Another facet is that as time progresses the public Defense Industrial units and capabilities must be privatized. This is the international trend. The government of India is also contemplating to do so. They are looking at offloading Base Workshops and hiving of some part of the OFB structure to the private players. Any such opportunity should be grasped.
A word of caution. While the defence industry should grow to cater for our national needs there is a need to ensure that quality is not compromised. In fact, the attempt must be that the quality of Indian products must be a shade better than foreign ones. It is a matter of honour and responsibility. Secondly, there is a tendency of overpricing. While profit is not a dirty word, it cannot be the sole criterion to enter the defence industry. Lastly, entering the defence industry is a commitment. The commitment is to power India towards strategic Independence. Indian Defense Industry cannot be populated by fly by night operators.