Self Reliance: An Illusive Goal?

A high degree of Self Reliance on defence products is of vital importance for both strategic and economic reasons for any country. However, India has not been able to achieve the same despite often repeated statements from power to be, with no tangible effect.

Way back in 1990 Self Reliance Review Committee in Defence under Dr. A.P.J. Abdul Kalam, had formulated a 10-year self-reliance plan to achieve 70 percent self reliance in defence by 2005, being of vital importance for both strategic and economic reasons. However, the target still has not been achieved despite often repeated statements from power to be, with no tangible effect and self-reliance still remains wishful thinking as most weapons and equipment continue to be imported. India procures around 60 percent of its weapon system and technologies via imports and rest by indigenous manufacturing (primarily done by Government players into the domain Ordnance Factories (OFs)/Defence Public Sector Undertakings (DPSUs) which have been limited to production while R&D is carried out by DRDO &its Laboratories. Even when defence products are manufactured domestically, there is a large import component in them.

Procurement Circles without Level Playing Field

Understanding that the DPSUs/OFs have their limitations and cannot be relied for every product/technology to be developed for Armed Forces, the Government opened up the defence sector for private sector participation in 2001 by obtaining a license, but its commitment to a level-playing field falls flat in the absence of orders to private sector till date. The DPSUs are still preferred for major defence programmes even though most of the programme undertaken by them are facing time and cost overruns and a number of products developed had been sub standard too but still are awarded defence programmes through 'nomination' basis i.e. without competitive bidding.

To give further impetus to this policy, the Defence Ministry came out with new policy measure in 2006, related to the concept of Raksha Udyog Ratnas (RURs) or Champions of Defence Industry, which was to grant the private sector companies the same status as DPSUs and OFs with an aim to provide level playing field to major private sector players, who are active in the defence sector with significant investments. As per this policy, around 3 private sector companies such as Tata, L&T, Mahindra, etc were identified to have the same status as Navratna PSUs. However, this laudable initiative was abandoned apparently because of under pressure from the DPSUs who sensed the risk of being sidelined.

Further, in 2007, the Defence Procurement Procedure (DPP) introduced the 'Make in India' programme which is being used for defence procurements by categorizing the capital acquisition proposals under 'Make' with two sub categories Make-I (government funded projects up to 90%) and Make-II (private industry-funded design and development opportunity for simpler requirements), 'Buy (Indian-IDDM)', 'Buy (Indian)', 'Buy and Make (Indian)', 'and 'Strategic Partnership (SP) Model' under DPP 2016. But these, as on date, are still mostly on paper and little headway has been made in this direction. Sadly, the Government's ‘Make in India’ initiative for the defence industry has not taken off, major reason being the inability to achieve progress in high-profile indigenous projects under 'Make' category - Futuristic Infantry Combat Vehicle (FICV), Tactical Communications Systems and Battlefield Management Systems (BMS) for the Army  launched a decade back. 'Make' projects go a step beyond even the Government's 'Make in India'chief mission because here the MoD funds cover 80 percent of the R&D cost and creates proprietary defence systems while the rest 20 percent is to be contributed by the private firms. However, bureaucratic delays are prevalent in all three high tech 'Make' projects offered to private firms. The Battlefield Management System (BMS) has been shelved because of lack of funds although it was being pursued since last 13 years. On the other hand, Tactical Communication Systems (TCS) has been stalled and awaiting final decision since last two years. While the FICV is yet to get to even the project development phase. The first attempt for FICV was scrapped in 2012 because of alleged 'perceived inconsistencies in the evaluation of EoI responses. It was three years before the project was restarted in 2015 and, as of now, awaits approval from the MoD's Defence Production Board (DPB) which is yet to decide Development Agencies (DAs) or select two from the five private sector firms that have submitted bids and are eligible to build two separate FICV prototypes in collaboration with the OFB. At the moment, the project seems to be going nowhere. Even if by all means, if companies are shortlisted in 2020-21, thereafter time will be required to develop the prototypes (3 to 4 years) trial and evaluation (2 years) and finally concluding the contract (1 year), thereby expecting the award of the contract by 2027 and commencement of manufacturing most likely to begin in 2029-30. This means a delay of 20 years or so. The only loss would be of the Indian Army who will have to operate and maintain the currently held outdated BMP 2, duly upgraded at an additional cost. Also by the time induction starts the technology to be developed can become obsolete. The project is also expected to be categorized under Make-II but Army does not want it under Make II category as it will further delay the project. The current impasse will delay the project by another three years.

Furthermore, in 2018, the Government came out with another new policy called the Strategic Partnership model as an attempt to encourage foreign Original Equipment Manufacturers (OEMs) developing world-class military equipment to tie up with private sector firms which would be declared as systems integrators based on their proven capability. The firms would make long term investments to develop a base for R&D and production facilities. However, under the policy, the Government chooses the Indian partner for a foreign firm which the private sector is not comfortable. Regardless, several big-ticket defence programmes have been initiated under Make in India after the announcement of the strategic partnership model. These include Light Multi Role Combat Aircraft (MRCA) Indian Navy Multirole Carrier Borne Fighter (MRCBF), Naval Utility Helicopters (NUH), Naval Multirole Helicopters (NMRH), and Reconnaissance & Surveillance Helicopters (RSH), Future Ready Combat Vehicle (FRCV) and  P-75 (I). But no tangible progress is seen in any of the programmes mentioned, as apparently these are being stalled by vested interests. All are facing prolonged delays.

Other policy reforms and schemes by the Government to promote start-up and innovation for self reliance by enhancing private sector participation through Government funding such as, Defence Innovation Fund (DIF), Technology Development Fund (TDF), iDEX, Defence India Start-up challenge (DISC) are facing slow development. The development leaves one wondering why the Government has come out with so many categories under 'Make in India' flagship mission or for start-ups funding programmes? This has made the entire procurement process more cumbersome, complex and confusing for the private sector leading to prolonged delays.

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