Wrong man on watch and SPP

Source Link

by Bharat Karnad

The Ministry of Defence is in desperately deep trouble for all sorts of reasons, including the most basic, namely, that the Government of India simply doesn’t have the financial resources to commit to large military acquisition and modernization programs. Especially at a time when the economic indices are slipping on all fronts from the GDP growth rate (down to 6.1%) to a stalled manufacturing sector. The general lethargy afflicting the economy means that, for want of funds, the Finance Minister Arun Jaitley has to nix the burgeoning demands of the Defence Minister, Arun Jaitley. One can see the dilemma Jaitley, holding clashing ministerial posts, finds himself in. He cannot create wealth out of stuttering economic progress and he can’t leave the requirements of the armed services hanging. And he can’t disappoint prime minister Narendra Modi for whom he is a harbinger of good times, and a mascot; Jaitley having crucially sided with Modi at the Goa meet when most of the BJP led by LK Advani was tilting towards Sushma Swaraj as the PM candidate heading into the 2014 elections.

Sure, Jaitley never was and is not now the man to run MOD. He has not a shred of interest nor intuitive feel for, or understanding of, the military or national security issues and cannot, for the life of him, decide between hard choices he is unable to make head or tail of. It was all very well for Finance Minister Jaitley to airily dismiss the indent for Rs 64,000 crores to raise and field the first of the mountain offensive corps (17 Corps). Quite another as Defence Minister to ignore the need for such a fighting formation in the face of a China challenge that far from abating, only intensifies. Like a cricket team that suddenly finds itself five wickets down, not many runs on the board, and relying on iffy tailend batsmen to put up a respectable score, and a time frame of two years in which to revive the BJP team’s prospects, Captain Modi sent in a night watchman he trusted to ensure that there was no rout.

By nature, night watchmen are not expected to be other than cautious and to fiddle around at the edges, which is precisely what Jaitley has been doing at MOD after Manohar Parrikar’s return to Goa. He has a whole table load of issues to pronounce on but has taken no big decision. So unsure and uncomfortable is he in his charge in South Block, he did not want to even read out an anodyne speech MOD bureaucrats would no doubt have drafted for him for the upcoming annual Shangrila conference of defence ministers and security experts in Singapore — the Asian counterpart of the yearly Wehrkunde security conference held in Munich featuring defence ministers and other notables from NATO member states and from countries where NATO forces are involved, such as Afghanistan, whence President Abdul Ghani’s presence at the 2017 Munich Meet in February this year.

This may have been out of Jaitley’s justified fear that he’d have to face the media asking difficult questions, which would show up the Modi government’s pusillanimity in the foreign-military sphere. Such as, why India has not done much beyond talking of security cooperation with Asian littoral states, to actually taking substantive measures to contain China? Why Australia, despite its keenness in participating in the annual 2017 Malabar Exercise involving Indian, American, and Japanese navies to be conducted next month in the Bay of Bengal, has been barred from doing so, with Delhi insultingly limiting Canberra’s involvement to posting its naval observers on the decks of participating ships? Why India has been all but inactive in asserting its right of navigation in the hitherto free seas off Indo-China that Beijing has cordoned off as its own exclusive maritime domain in the South China Sea? And why Vietnam — with Delhi not passing on the Brahmos cruise missiles to Hanoi, is veering away from India, and towards the US, to shore up its defences against China? Etc. One can intuit how Jaitley saw himself tripping up no matter what he said and potentially earning the ire of his boss. After all, Modi has routinely made much of his having enhanced the country’s international standing and status in his three years in office.

Now consider the long awaited “strategic partnership policy” the MOD recently unveiled — mostly a formalization of the Dhirendra Singh Committee Report, on which the Modi regime has staked much in terms both of arms self-sufficiency and employment generation — its ‘Make in India’ program. It is a non-starter. For the simple reason that the major Indian industrial conglomerates that will be identified for their skilled manpower base, and industrial capacity and track record, are expected to approach established defence industrial majors in the West and Russia to produce technologically indate military hardware in four armament categories — conventional submarines, combat aircraft, helicopters, and armoured combat vehicles (tanks, ICVs, APCs). So far so silly. Why? Because other than Larsen & Toubro, Tata, and possibly Mahindra owing to its automotive infrastructure, each of them is limited in its own way and for different reasons and lack the requisite physical wherewithal and/or expertise to meet the bill as potential prime system integrators to become the Indian Boeing or Lockheed Martin.

Secondly, with the foreign suppliers unable to have (51% plus) controlling equity in the joint ventures with Indian partners, there is no incentive whatsoever for foreign defence industrial majors to transfer advanced cutting-edge technologies owing to concerns about IPR, and because they would not want to set up competitors in the business, etc. So, India will have a whole bunch Western companies clamouring to sell one or two generations old military hardware and sell run-down assembly lines. So, if this ‘Make in India’ approach is persisted with, the Indian military will become a repository of antique armaments. Such as the F-16. But because some of the Indian strategic partners will be newcomers to the industry, not having ever produced a thing of military value, to wit Reliance Aerospace by the Ambanis, the outfit to be set by the Adani Family close to Modi, et al, they will happily settle for any crumbs thrown their way in terms of manufacturing tools and jigs discarded by a Boeing, Lockheed, Navatia of Spain, British Aerospace, or Saab of Sweden, etc. used to turn out obsolete weapons systems. And, inevitably these private sector companies, like their public sector counterparts, will be strung along by their foreign partners who will keep most of the high-value production for themselves and their home industries, sticking the Indian end of the JVs with base structures, compelled perennially to import the high-value items and tech as “black boxes” which, in turn, will be high revenue earners for the foreign company.

Combine the above two factors and we have a recipe for the establishment of a wasteful private sector analogue to the public sector mess of DPSUs — all keyed to licensed production of foreign items, a screw driver technology level the country has not progressed beyond since the fateful decision was taken by the Indira Gandhi government to manufacture the British Gnats, the Russian MiG-21s, and the British Jaguar, in the late Sixties and Seventies, rather than rely only on indigenously-designed armaments which was feasible given the opening made by the home-grown Marut HF-24 and the combat aircraft that would have naturally followed.

So, what exactly is the value of duplicating the public sector limitations in the private sector? This is the point I have been trying to make for many years now, and why I have been advocating since my days in the NSAB during the first years of the Vajpayee government the need for an an entirely novel solution: Integration of public and private sector defence industrial resources to productively combine the physical facilities of the public sector with the labour productivity, profit motive, and the sheer commercial drive to ingest technology and to create it of the private sector. This solution, as I have elucidated in official papers and in my books and writings, involves all the DPSU and Ordnance Board assets being divided into two nearly equal groups, capacity and capability-wise, and L&T and Tata put in charge of these two competing defence industrial combines with the freedom to mesh their own skill-sets and competencies with those of the DPSU-Ordnance assets under their control, and to obtain technologies from abroad or to source them locally as they please, just so long as they are made aware of the weightage accorded to the indigenous technology content of their products when it comes to selecting items for bulk procurement. In this set-up the two Combines will be expected to compete for defence contracts, with the government willing to finance product development up to the prototype stage, and the runoff and selection conducted by a separate MOD agency. In this scheme, initiative, innovation and economic and industrial risk-taking will be rewarded with extra points when it comes to assessing the finished product. Moreover, the possible concern that this is another way to privatize valuable public assets is addressed by the fact that in this arrangement the grouped public sector companies far being sold to L&T and Tata, will fetch the government handsome rent for use of facilities and even royalty (which can be negotiated) for each major system rolling out of their assembly lines. In this context, Indian corporates will more willingly invest in niche capabilities not available in the groups they head, than in the SPP sort of scheme, where the returns on investment will be wholly dependent on the sort of technology foreign companies part with. I mean what’s the sale prospects for a JV trying to sell the late 1960s vintage F-16 to countries that can as easily and for the same or lesser price tag buy the Su-30? Will India ever stop being a sap?

Jaitley, who has made banal statements about ‘ Make in India’ policy promoting arms self sufficiency, does not seem to have even minimal appreciation of what’s involved, what it will take, and why going indigenous is at once the more onerous and more difficult option, but also one that is unavoidable and inescapable if India wants to get out of importing all its military equipment, and become a genuine great power. Then again, Jaitley is only the night watchman sent in to firm up the innings. Plainly, he doesn’t have the druthers to risk an imaginative solution, because defence minister is a fulltime job and it is beyond him.