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Achieving Self Reliance: Still A Long Way To Go

Self Reliance in Defence sector is the need of the hour as it holds vital importance for both strategic and economic reasons for any country. However, India has not been able to achieve the same despite tall claims by the Government-owned production units, hence, there exists a large capability gap exists in the technology and equipment held by Defence Forces produced indigenously vis-a vis what is needed.

Self-reliance is a major cornerstone on which the military capability of any country rests.  Accordingly, the Defence Production Policy promulgated by the Government, aims at achieving substantive self-reliance in key defence technologies by 2025 and sets a target of Rs 170000 Crores (USD 26 Billion) turnover in defence goods and services involving additional investment of nearly Rs 70000 Crores (USD 10 Billion). Further, it looks at achieving exports of Rs 35000 Crores (USD 5.3 Billion) by 2025, and creating employment for about 2-3 Million people. This means, the defence manufacturing sector needs to grow at least at a compound annual growth rate of more than 8 percent at least. However, the matter of the fact is that these targets seem to be way too ambitious to be achieved. One of the main reasons being the Government-dominated sector who are enjoying virtual monopoly in defence with a captive customer base, and no Government monitoring on performance improvement, these have become a predominant assembler of systems for the Indian military.

Notwithstanding the preferential treatment these agencies have singularly failed to keep pace with technological developments; moreover, what is shocking is that till date no major indigenous competence even through upgrades has been developed. Basically, these Indian production agencies, namely the 9 DPSUs and 41 Ordnance Factories (OFs) in the past never bothered to acquire knowledge including the “know-why” and “know-how” of developing a certain class of equipment  which has resulted in creating large capability gap in the technology and equipment held by defence forces produced indigenously vis-a vis what is needed. Most of the weapons are either outdated or need to be augmented with affordable contemporary systems. The DPSUs and OFBs are only assembling the system when Technology of Transfer (ToT) is sought from OEMs on built-to-print basis resultantly due to lack of spares and maintenance there has been growing number of aircraft/submarine accidents (such as Su-30 MKI, MiG29 aircrafts, Sindhughodh Submarine) resulting in loss of innocent lives and also grounding and unserviceability of platforms for a long period, affecting the operational preparedness.

Dependence on import till date is more than 60% entailing a certain vulnerability to the technology denial and not getting the technical know-how coupled with a variety of obligations that would leave the imported defence hardware unserviceable at times making the country strategically at risk if supplies are obstructed in times of war/conflict. This so could too happen in spite of ToT, license production, etc. as a part of agreement of the imported defence hardware. Further, foreign imports also results in maintenance problems of the defence product acquired at times. Thus, there is urgent need in building a strong indigenous Defence Industrial Base (DIB) by developing the technological capability in house, if India needs to be strategically secure and self-reliant in major defence equipment.

Technology Gap

Noteworthy, the Research & Development (R&D) in defence in India is primarily carried out by DRDO and it's over 50 Laboratories & establishments and manufacturing is done by the 9 DPSUs and Ordnance Factories. Even when defence products are manufactured domestically, there is a large import component found in them. Despite tall claims the reality is that the DRDO has achieved little to fulfill the requirements of the Indian Armed Forces, even though the significant investments the country has been making year on year. For example a total Rs 11096 Crores has been spent till date on the indigenous Light Combat Aircraft (LCA) and the Kaveri jet engine development programmes. The LCA programme has been running for 36 years with the Government spending Rs 9063.96 Crores on the project. Further, the Kaveri engine development has been going on for 30 years and Government has spent Rs 2032 Crores so far. Projects assigned to the DRDO/DPSUs are characterized more by time and cost overruns, defects and poor quality issue and it needs no underlining that with this past track record and lack of keenness to innovate & grow, the organization is unlikely to do any better in coming years. The Indian Armed Forces, therefore, will have no option but to continue to depend on foreign sources to meet with even some of their basic needs in respect of military hardware. It is indeed a sorry state of affairs.

The Hype of Self Reliance

The Government-owned defence units seems to be appear good in only one thing which is making huge promises and creating hype to develop and manufacture 'this and that' high-end world class technology/item indigenously which eventually results only in a prolonged delay and lack of quality or dropping off later on; thereby wasting the Government money and time. Also, most of the times the technology developed is substandard or become redundant or costlier by the time it is finally ordered, leading to yet another setback. Though there is no denial that they have leapfrogged in some areas such as missile systems, but it is struggling with basics in many others such as Rifle.

Few examples to substantiate this fact is the F-INSAS case which was closed after years and non-development of even basic/critical product like rifle by DRDO; though few were developed but were not approved by the Indian Army. Further, the DRDO has even failed to develop small items such as special clothing for soldiers in high altitude. Same is the case with DPSUs with chronicle of tall claims becoming its forte. Also, they are years behind in their delivering their current tasks and orders/contracts. At present, various defence programmes undertaken by DRDO and various DPSUs be it production of aircrafts (Tejas), engines (Kaveri engine), manufacturing of submarines/frigates (Project 75, Project 15) or various missile programmes (Agni, NAG ATGM) and also maintenance of current aircraft in service, are seen to be lagging behind by years. What is more dramatic is when DPSUs such as HAL which recently came up with a claim to develop Naval Utility Helicopters (NUH) on its own, when it has not been able to develop a fighter aircraft (LCA developed by HAL has substantial imported systems) on its own and with already swelled up order book. Notably, the order book of most of DPSUs is already full booked for almost 10 years. On the other hand, private sector companies such as Larsen & Toubro and Reliance Naval are struggling for orders, as their production facilities remain grossly underutilized.

Furthermore, the myth of substantial indigenous production that the MoD perpetuates by citing orders placed on DPSUs and OFs. The MoD response does not give details of extent to which orders for “indigenous" weapon systems and equipment actually pay for imported equipment. This is because the equipment supplied by DPSUs and OFs contains many imported components, sub-systems and systems, but are not shown as DPSU or OFs into the “indigenous” kit it supplies. These could be from 35-40% of the supplies which dramatically enhances India's foreign arms dependency. For ex. Hindustan Aeronautics manufactured Sukhoi-30MKI fighter Ltd has 44% import content even after building it in India under license for over a decade. This entire scenario makes one think that is the Indian defence establishment quite content with import as very little is being done to change the status quo.

Also to be noted, the indigenous content in most of the projects has been static for the last two to three years. This indicates that the technology received under the transfer of technology projects is not being absorbed, enhanced and upgraded indigenously by the DPSUs, OFBs and DRDO, as required. The following Table throws light on the high average import content by the DPSUs/OFBs despite their tall claims of 'Make in India'.

Way Forward

Indigenization, at present, is being limited to absorption of ToT under licensing arrangements or assembling and also indigenizing a few components, spares and assemblies by the public sector entities which when measured in any performance parameter such as innovation, customer satisfaction, timely delivery, productivity and export earnings, portray a rather dismal picture and is definitely not the apt answer to overcome the increasing import dependency of the country. The Government should revamp the working culture of the production agencies and make them more accountable and efficient along with involving the private sector in large scale and giving them chance for fair competition. It should take considerable actions for creating conditions conducive for private industry to play an active role in manufacturing and R&D. Rather, these private sector companies in defence has been proving far more efficient than the Government sector entities and have shown competence in absorbing technological 'know-how' skills. Given a chance they can come up with indigenous equipment in coming years. Subjecting to competition with the private sector would yield the desired results and make public sector more efficient. Furthermore, synergizing public and private sector is a must for creating robust indigenous defence industrial capabilities and will thereby lead to gradual and systemic reduction of import dependence. The public sector organization from now on should focus on technologies only which it can excel and deliver on timely basis and also should involve private sector if need be which has been relatively more efficient and cost effective particularly in building systems of systems such as optics, electronics and Information Technology (IT) related spheres for defence hardware. All these factors will go long way to achieve desired level of self reliance. It is time to be realistic rather than making overstatements.

Given the fact, that India is expected to spend around USD 130 Billion on defence modernization, as per official estimates, in the next seven years; the opportunity should be fully exploited for the benefit of local Defence Industrial Base of the country by giving opportunities to both public and private sector on fair basis and through tie-ups with global OEMs wherever required for development of cutting edge technology which the indigenous DIB cannot manufacture on its own. This will not only improve India's self-reliance and indigenization in defence production but will have a multiplier effect by way of helping in saving the much required foreign exchange, building technological capacity, creating employment and building of new skills. Further, the indigenously developed equipment/product can be looked forward for exporting which further will help in generation of the vital foreign exchange.

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