25/04/2014
For India to emerge as a major international power, or acquire a regional military edge, it must reduce its dependence on imports. Besides sophisticated systems, India is today importing even basic defence items such as assault rifles and carbines. As of now, India’s high technology industry and Research and Development (R & D) base has not developed adequately. Our capacity to spend on long gestation R & D projects too is limited. In addition to finances, the expertise to integrate systems and the availability of qualified and trained manpower falls short of the requirement to develop or indigenously manufacture complex weapon systems in the country. We therefore need a dual approach encompassing a time bound indigenisation programme with a roadmap for developing necessary R & D and manufacturing set ups for the long term and a simplified and an efficient defence purchase procedures to tide over the present equipment requirements for maintaining operational readiness of the services.
Defence Industrial Base
India today has a fairly large Defence Industrial Base which has not been effectively directed or monitored to deliver the country’s defence needs. It has 41 Ordnance Factories (OFs), 9 Defence Public Sector Undertakings (DPSUs) and a network of over 50 Defence R & D Laboratories under the Defence Research and Development Organisation (DRDO) employing 1,80,044 employees (81,130 in DPSUs and 98,914 in OFs). These OFs produce relatively low technical level items such as ammunition, explosives, weapons, equipment, materials and components, armoured vehicles, ordnance equipment and the like. DRDOs budget in 2013–14 was Rs 10,610.17 crore, amounting to 5.21 percent of the total defence budget[i]. The budget allocation is huge compared to Indian benchmarks, yet too little for the type and quality of work and output these organisations are expected to deliver.
Despite the existence of a large defence base in the government sector, India’s arms imports have been growing consistently over the years, giving the country the dubious distinction of being the largest arms importer in the world. The public sector performance has not enthused the Armed Forces, who happen to be the buyers of the end product. Most projects are characterised by time delays, cost escalations and poor quality control. Even the 5.56 INSAS rifle developed by DRDO after 15 painfully long years is nowhere comparable to the modern assault rifles, leading to the government to approve the import of some 66,000 assault rifles and 44,000 carbines amongst other items. The night vision devices produced by the DRDO, though with 100 per cent imported Infra-Red (IR) tubes are far bulkier and heavier than the imported ones. Even in items like clothing and bullet proof jackets, the quality of the products leave much to be desired. As for equipment like the TATRA trucks, even when the Indian private sector is quite capable of manufacturing a similar vehicle both technologically and industrially, we chose a DPSU for procurement which acted as a mere middleman in importing them at huge costs to the exchequer.
The functioning of the DPSUs, OFs and DRDO hence need a review. Considering the high quality which the Indian private sector is now capable of producing, manufacture of stores and equipment like clothing, ordnance equipment, vehicles, ammunition, explosives and communication equipment can well be left to the private sector with an eye on breeding an export market for the future. We need to dispassionately review the cost benefit ratios of continuing with some of the government establishments and close down or relocate those that can be dispensed with. Organisations which can be retained must have adequately trained manpower with the desired technological expertise. These must be headed by professionals from amongst the best available in the country rather than being handled by bureaucrats. To enhance capability, performance audit could encompass quality and efficiency of products, quality of after sales service, economic prudence and the ability to build technological capabilities and skills. Public sector units should also compete with the private sector on a level playing field and not be given any preferential treatment including in the offer of contract and other terms and conditions.
Defence Procurement
The present defence procurement system is marred by time delay, lack of transparency and professionalism, giving rise to allegations of corruption followed by black listing of foreign companies for doing business in India. We need to consider establishment of an independent transparent expert body for all defence procurements, which could have representatives from all stake holders as well as personnel with the desired skill sets. This will enable integration of combat experience with advanced engineering knowledge, the key to developing state of the art technology in defence production. By creating and entrusting the job of processing defence purchases to an autonomous body, we will be able to stonewall and separate decision makers, politicians, bureaucrats and interest groups besides building an interface between the decision makers and the vendors.
The no-cost-no-commitment trial system, which the government adopts for all major capital acquisitions, imposes extraordinarily high costs on both foreign and domestic vendors. The lengthy and indecisive tendering and decision making process coupled with unending demands for trials and demonstrations at varied locations, often with long time gaps, the hassles of customs clearances for the trial equipment at the ports of entry, the barriers, taxes and harassment at the access points to various states within the country are major disincentives for any vendor to do business in India and these hindrances must go. Added to these are the delay and costs imposed by aborted tenders when irregularities or corruption charges are suspected or levelled. Blacklisting firms is counter-productive. Stringent financial penalties should be inbuilt into the contracts, rather than imposing bans. Indecisive officials also need to be held accountable and penalised and the vendors compensated suitably.
Maintaining secrecy with regard to the Government’s long term order book in every case is counterproductive and needs review. Providing early information on the anticipated demands apart from reducing gestation period for the execution of orders will provide the manufacturers of the main equipment and its sub systems the opportunity to carry out R & D work on products and thus improve quality. The lack of transparency allows access to such information exclusively to favorite players leading to corruption. This issue needs deliberation. In addition, the present system of annual budgeting for capital acquisition in the military also could do with change. A rolling budget or creating a permanent special fund for the purpose may perhaps yield better dividends.
The issue of joint ventures needs a business rather than a bureaucratic approach. No country or businessmen would ever be willing to part with advanced technologies without the terms of business including the fidelity and stability of the collaborative arrangements being evenhanded or if the foreign partner is deprived of some degree of control over the running of the industry. This would imply allowing increased stakes to the foreign investor, permitting easy repatriation of profits and adequate protection to intellectual property shared in such ventures. Providing opportunities to foreign manufacturers coopted in such joint ventures to develop these facilities as global manufacturing hub may be an answer and a win-win situation to both.
Brigadier V Mahalingam (Retd) is a former Force Commander of the National Security Guard and a Defence Analyst. Views expressed are personal.
[i] Indian Defence Industry Issues of Self - Reliance’ Laxman Kumar Behara, IDSA, at http://www.idsa.in/system/files/monograph21.pdf, pp 10 and 27.
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