Goa Defexpo: A globalised arms industry in India but for the whole world

Goa: The ongoing ninth Defexpo at Goa, the biennial event that assembles the arms merchants and arms producers from all over the world is being held for the first time outside Delhi, saw the defence minister Manohar Parrikar, a native Goan, announcing the latest Defence Procurement Procedure (DPP).

Predictably, the DPP has evoked mixed reactions. Critics have a point when they say that it is not a complete document as yet since the chapter on the much-talked about strategic partners in the private sector who could join the public sector undertakings that dominate the arms productions is still being written by the defence ministry. It seems that major private Indian players like the Tatas, L&T, Mahindras and Ambanis who have entered the defence industry of late want to be strategic partners in multiple areas (ranging from manufacturing fighter plane to building warships and submarines), something the government will like to be restricted to one field only. This differing perception may be the reason for the delay on determining criteria for being a strategic partner.

Goa Defexpo: A globalised arms industry in India but for the whole world



However, the other features of the latest DPP (the last one was made in 2013) have been welcomed by the industry and foreign companies, an impression that I gathered by attending various seminars being held at defexpo venue Naqueri-Quitol, South Goa. While encouraging foreign companies to come to India with their capital and technology to produce and develop arms along with their Indian partners, the DPP makes it clear that that the Modi government’s topmost priority will be on Indian designed, developed and manufactured (IDDM) category.

For this writer, the overall evaluation of the new DPP should wait, since the defence minister himself says that “This is not a perfect policy document. It is not full-proof. We will reexamine it after six months, during which I will keep my eyes and ears open for suggestions to improve and remove difficulties, if any”. What is more important, therefore, is the clarity on the part of the Modi government that India must be a major arms manufacturing nation by developing an indigenous military-industrial base in line with the idea of “Make in India”, whose products will not only meet the domestic demands but also cater to the needs of the global market. In other words, from being the world’s largest importer of arms, India should transform itself in such a manner that it will be a major exporter of arms. This is the point, made by both Parrikar and Dr. S Christopher (Secretary, Department of Defence Research & Development and Director General, DRDO), that caught my attention over the last two days. Let me dwell with this theme.

Parrikar says that “India can export LCA aircraft like Tejas, Akash and Brahmos missiles after meeting the 90 percent demands of our own forces.” Dr. Christopher says that while many DRDO products may not be up to the expectations of our forces, but surely, they can meet the expectations elsewhere outside the country and can be easily exported. He gave the example of the Pinaka missiles(rejected by our armed forces), which are in demand in countries of West Asia. “I am all for exporting our products abroad after meeting the domestic demands. We also can export items that do not have domestic demands. We have demands for our Brahmos and Akash missiles, small arms and many other products”.

As has been pointed out, India is the world’s largest importer of arms. China is also a big importer of arms; in fact, it is the fourth largest. But China is a big exporter of arms, too, at the same time. The latest estimate says that China has replaced Great Britain as the world’s fifth largest exporter of arms. That bulk of the Chinese arms supplies goes to Pakistan is a different matter altogether. The point is that while importing arms is unavoidable in the life of a nation while developing, the real strength in the ultimate analysis will come from a sound indigenous defence base, which, apart from working towards self-sufficiency or self-reliance in arms, generates wealth for national exchequer by exporting some of its products.

In other words, the bigger the gap between its exports and imports, stronger a country is. It is not that India does not export arms at all. It does. However, there is a tremendous difference between the quantum of its imports and exports, whereas ideally this gap should have been between its exports and imports. We are number one in importing arms, but as far as arms exports are concerned, our rank is as low as 26th. An estimate says that in the year 2014015, India imported Rs. 36,900 worth of arms, ammunition and related goods. In contrast, its defence exports last year were worth of about only Rs.2000 crore, a figure given by none other than Parrikar himself on the inaugural day of the defexpo.

Of course, it is to the credit of Parrikar that last August he formally allowed the Defence Research and Development Organisation (DRDO) to export defence equipment in 16 categories that included armoured vehicles, ammunition, rifles and small arms, military training equipment, electronic warfare devices, software, bombs and torpedoes. In fact, the DRDO has now shortlisted missiles for being the centerpiece of India’s arms exports, within the framework of the missile technology control regime that bans exporting missiles with ranges above 300 km. Overall, the military hardware shortlisted for export includes Astra beyond-visual-range air-to-air missile, Prahar surface-to-surface missile, Akash missiles, light combat aircraft (LCA), supersonic cruise missile Brahmos, sonars, Arjun Mk-2 tanks, airborne early warning and control system, a variety of unmanned systems and battlefield radars.

Of course, it is too early to say what impact the decision to export arms will make on the potential arms-buyers. That will be known when DRDO gets concrete orders from international orders for its indigenously designed military hardware. The usual criticism of the DRDO’s functioning over the years have been that it promises more but delivers less and that while designing the products it does not take into account the views and concerns of the end-users, that is, the Indian military. That India still imports nearly 70 percent of its defence needs means that the DRDO and other defence public sector undertakings have not been able to overcome serious challenges that inhibit their growth and effectiveness.

Broadly speaking, India’s defence industrial policy (DIP) has so far been marked by three principal features. First, India intends to maximize its indigenous production through its own efforts – quality personnel/scientists/technologists and production centers. Second, if indigenously not feasible then the country will go for licensed production of what could be obtained abroad. This obviously involves transfer of technology from the foreign vendors so that over the years the country gains required knowledge and expertise to develop arms on its own. Third, if the situation so warrants then the country will for direct purchases. But it has so happened that the third feature has over- dominated the DIP as a whole.

The most fundamental flaw in our DIP is that we have not spent enough on our research and development (R&D). It is very easy to criticize the DRDO, but the fact remains that the DRDO’s share in our defence budgets is not much to talk about if one compares the sums that the major arms exporters invest in R&D. Our brightest students do not go for R&D. There is a tremendous shortage of qualified engineers and scientists in our defence sector. And this explains why the second feature of our DIP is equally poor. You may frame enough provisions or rules for technology transfer and offsets with regard to the foreign vendors. But what use they are they if you fail to utilize them because of the essentially faulty personnel policy? Besides, whatever one may say, the sad reality is that no foreign vendors or original equipment manufacturers (OEM) will like to part with their intellectual property rights; even if they want to, their respective governments will not allow that to happen all that easily. That precisely is the reason why we have taken inordinately long time to develop Tejas or Arjun. And that is also the reason why foreign direct investment (FDI) in our defence sector will not rise beyond a point.

Secondly, it is to be learnt from the examples in the major arms-exporting countries that defence technology often involves long term investment as obsolescence here is high. The production of the next generation of an equipment or of a different variant always increases the cost of the equipment, involving, as it does, the integration of various sub –systems. Similarly, you cannot expect your indigenous products to be as good as, let alone superior to, the similar foreign products that are available in the international market. After all, making arms indigenously is a learning curve. China is exactly undergoing this process. Its home-made weapons are qualitatively inferior to foreign products. But the important point is that it is one the right course. China-made weapons will be infinitely better 10 years hence because China is climbing up that curve.

Of course, India is not China. Ours is mixed economy, a fact which should have added to our strength. Because, unlike in China, our challenge can be met by a partnership between the public and private sectors. Unfortunately, the government in the past did not encourage the participation of the private industry in the defence sector. But things are changing now, evident from the fact a record number private players - 1055 companies from India and 47 other countries – are participating in this edition of the defexpo; and what is more important, they all are unanimous in joining hands with the Indian government and public sector undertakings to build “together” a “globalized military industry” in India but for not only India but also the whole world.

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Updated Date: Mar 30, 2016 17:41:38 IST

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