Launched by Prime Minister Narendra Modi in May 2020 with a Rs 2,000,000 crore (US$ 262 billion) package (10 percent of India’s GDP), the Aatmanirbhar Bharat campaign aims to foster self-reliance across various sectors. In December 2022, Minister of State for Defence Ajay Bhatt informed the Rajya Sabha about an embargo on imports beyond specified timelines for 411 items of Services and 3,738 items of defence public sector undertakings (DPSUs). Additionally, FDI was liberalised, allowing 74 percent participation in Innovations for Defence Excellence (iDEX), involving start-ups and MSMEs. The package also featured 595 Industrial Licences issued to 366 companies in the defence sector until October 2022, a reformed offset policy to attract investment and Transfer of Technology (ToT), allocating 25 percent of the research and development Budget for Industry-led R&D, and significant investments made in Uttar Pradesh Defence Industrial Corridor (UPDIC) and Tamil Nadu Defence Industrial Corridor (TNDIC) – Rs 2,242 crore and Rs 3,847 crore, respectively. Furthermore, domestic procurement has increased to 68 percent, with 25 percent of the budget allocated for procurement from private industry. The expenditure on defence imports reduced from 46 percent to 36 percent over the last four years, with claims of “rapid progress” towards achieving “complete” Aatmanirbharta in manufacturing defence equipment required by the Armed Forces.
In FY 2023, defence exports are estimated at an unprecedented Rs 16,000 crore. The Ministry of Information and Broadcasting has lauded India’s defence industry for exporting to over 85 countries and engaging 100 firms in defence product exports. By surpassing Rs 1 trillion ($12 billion) in defence production in FY23, India has seemingly achieved a remarkable milestone in its quest for self-reliance in defence manufacturing. The government aims to achieve a defence export target of Rs 36,500 crore (US$ 4.8 billion) by 2025.
The MoD has recently announced a fresh list of 928 military items banned from imports, marking the fourth ‘positive indigenisation list’ of crucial components used by DPSUs placed under an import ban over the last two years. While around Rs 1 lakh crore has been set aside for domestic procurement in this year’s defence budget, funds reserved for R&D remain minuscule. Additionally, India continues to be one of the largest arms importers globally, accounting for 11 percent of the total arms sales.
Despite progress towards self-reliance in defence and impressive defence exports, it is crucial to closely examine the quality of progress, private industry participation in the defence sector, the governmental defence setup, critical technology development, offsets, and transfer of technology, and the balance between exporting and equipping the Armed Forces.
Private Industry Participation
The defence industry in countries like America has flourished with state-of-the-art technologies due to complete privatisation. In India, private industries have the potential to accelerate self-reliance, but a level playing field is not provided due to the nexus between the bureaucracy and the governmental-defence setup. Current estimates suggest self-reliance in defence production is below 35 percent, with about 90 percent of domestic defence manufacturing dominated by the public sector, leaving only 10 percent for private industry. A PBI release of June 18, 2018 detailed a ‘Chintan Shivir’ by the MoD to discuss multiple issues, including “enhancing the level playing field in defence production and procurement,” exposing annual false claims that an “absolute” level playing field is ensured.
There is a need to critically examine the monolithic organiations such as the Defence Research and Development Organisation (DRDO) and Defence Public Sector Undertakings (DPSUs) and the finances invested in comparison to the outputs. No DRDO products are on time, and all involve colossal cost escalation by the time they are finally developed and fielded.
The bane of Ordnance Factory Board (OFB) has been inefficiency, lack of accountability, poor work culture, substandard products costlier than that available off-the-shelf, wasteful expenditure, and corrupt practices, which have been pointed out by the CAG periodically. This can hardly change with 76,000 workers of OFB (and 41 ordnance factories) transferred en-masse to seven new DPSUs, with the same management other than change in a few directors. Privatization wasn’t done due to vote-bank politics and multiple worker unions like Congress-affiliated Indian National Defence Workers’ Federation (INDWF), Left Front-affiliated All India Defence Employees’ Federation (AIDEF), and BJP-affiliated Bharatiya Pratiraksha Mazdoor Sangh (BPMS).
Combat uniforms supplied to the Army are three times more expensive than those of the same material available in the open market. In 2020, the Army reported faulty OFB ammunition resulting in 403 accidents in the past six years, killing 27 soldiers and a loss of Rs 960 crore. In 2021, one crore indigenous Tavor rounds supplied by OFB were found defective. The Army informed the MoD that the cost of faulty ammunition lying around is more than the procurement cost of 100 medium artillery guns. These are only a few examples, but where is the accountability?
Hindustan Aeronautics Limited (HAL), established in 1941, came under government control post-independence. Has its working been optimised in the past 76 years? LCA Tejas took 36 years to fructify. Forget the engine and other major components, why does the Tejas Mk-1 still have a UK-supplied nose cone, imported ejection seat, and British Dunlop tyres? This is not to criticise HAL but to drive home the point that without overhauling the DRDO, the pace of self-reliance will remain slow.
The DRDO requires significant streamlining. The conversion of OFB to new DPSUs could potentially integrate ‘some’, if not all, of the following DRDO entities: DRDO’s Armament Research & Development Establishment (ARDE) with the DPSU Advanced Weapons and Equipment India Limited; Aerial Development and Research Organization (ADRDE) and Centre for Airborne System (CABS) with DPSU Gliders India Limited; Vehicle Research Development Establishment (VRDE) and Combat Vehicles Research & Development Establishment (CVRDE) with DPSU Armoured Vehicles Nigam Limited, and; Defence Metallurgical Research Laboratory (DMRL) with DPSU Advanced Weapons and Equipment India Limited.
Critical Technology Development
Former President, Dr APJ Abdul Kalam had said, “If four things are followed: having a great aim, acquiring knowledge, hard work, and perseverance, then anything can be achieved.” He pointed out five areas for India to become a superpower, of which one was “self-reliance in critical technologies”. We need to seriously ask ourselves where we stand today in terms of critical defence technologies compared to China – at a very basic level say “aero engines,” not the modern technologies like autonomous weapons systems, cybersecurity, AI, EW, UUVs, and hypersonic weapons?
The truth is that we are nowhere in aero-engine technology to meet our defence needs. Compare this to China’s J-20 stealth fighter already having flown with the indigenous WS-15 jet engines, marking a potential upgrade closing the capability gap with US jets, possibly enabling deeper strikes on US bases. DRDO-HAL failed to produce the required aero-engine over the past 60 years despite claims that we have the best brains notwithstanding the brain drain. China, which was 50 years behind us, has surged past. Can we use the excuse that China used reverse engineering looking at our immoral practices to win elections?
Offsets & Transfer of Technology
Offsets in defence are a game being played by politicians and bureaucrats – introduced or done away with as and when found convenient. A CAG report in September 2020 had pointed out that of the 46 contracts of offset commitments worth Rs 66,427 crore made by foreign vendors from 2005 till March 2018, only Rs 11,396 crore has been claimed. The present state is not known, but 100 percent claim of such commitments is unlikely given the loopholes and opportunities for corrupt practices. This is perhaps why the MoD adopted “self-audit” – so that no one is wiser.
As for the transfer of technology (ToT), take the example of aero-engines once more. No one will transfer the “core” of aero-engine technology to us – neither as part of the GE-414 engine nor the Safran aero engine under ‘Make in India’ for DRDO’s under-development Advanced Medium Combat Aircraft (AMCA) and the yet-to-be-developed twin-engine deck-based fighters (TEDBF). As a result, we will remain foreign dependent on such technology. The GE-414 engine is already operational, and Safran has been working on a 125 KN engine for the French next-generation fighter. In all probability, these engines will only be assembled in India with some subsystems, accessories, and parts of the airframe manufactured under ‘Make in India’.
In 2017, Safran offered to use its M-88 engine (which powers IAF Rafale fighters) as a prelude to co-develop a new engine in India. But DRDO refused, thinking its Kaveri engine could power the LCA Tejas. However, this didn’t work despite Kaveri being under development for more than 20 years. Kaveri reportedly would be fitted on a UAV. Five years down the line, we are going for collaboration with Safran for the aero engine – at a higher cost. The propaganda about 100 percent ToT by GE and Safran is only to fool the public. No one will give full aero-engine technology to us – we have to develop our own.
For years we have been making Scorpene submarines at Mazagon Docks Limited (MDL) in collaboration with France, but we still don’t have the technology. Moreover, the Scorpene project has taken 10 more years than originally planned with almost double the costs. The three additional submarines being procured now are not Scorpene but a conventional version of the French Barracuda SSN, which will be “assembled” in India, not manufactured under ‘make in India’ as is being propagated. Modifying the Barracuda to a conventional sub would increase the costs and still more when fitting the Indian AIP system. Why not say we are procuring three Barracuda, not three additional Scorpenes?
Exports versus Equipping Armed Forces
The absence of a national security strategy indicates we are not serious about finding the right balance between national security and the economy. At the same time, it doesn’t appear we have even found the right balance between exports and equipping our own Armed Forces. For example, look at the deficiencies and serviceability state of the light helicopter fleet of the Armed Forces. Yet, we are exporting the Advanced Light Helicopters (ALH) while leasing some light helicopters to meet our own Services deficiencies – which may be serviceable but not necessarily new.
This too when glitches in the ALH, including control rod failure affecting power input to rotor blades and hydraulics issues, don’t seem to have been fully resolved – as indicated by periodic ALH crashes. Isn’t this a lopsided approach? Shouldn’t equipping the Armed Forces be the first priority for all types of defence equipment?
We “are” making progress in self-reliance in defence. One way is to keep gloating over what we have achieved, and the second is to address what is wrong. The pursuit of excellence is a never-ending process, and we are hardly anywhere near “excellence” with patchy successes and below 35 percent in self-reliance in defence, mostly by way of sub-systems and parts. There is no alternative to achieving self-reliance in defence if we are to retain strategic autonomy. It is crucial that we address our shortcomings and ensure holistic private industry participation in defence manufacturing and procurement to accelerate self-reliance in defence and achieve the US$ 5 trillion economy target.
-The writer is an Indian Army veteran. Views expressed are personal. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda