Defence cuts in the prototype development budget have effectively bombed indigenisation
by Ajai Shukla
Business Standard, 8th Feb 13
The anaemic growth in India's defence capital budget this year, along with news that China is expanding its own more robustly, puts indigenisation to the forefront of the conversation again. As Defence Minister A K Antony has argued, it is essential for India to build its own defence equipment to avoid the skulduggery that is involved in buying arms. No country has ever become a great power without building its own arms. This is no longer just a question of strategic autonomy; today it is also a military-technical issue, in an era when the capabilities of defence equipment depend more on software than on hardware and when it is increasingly easy to compromise weaponry sold to another country through the introduction of malware and kill switches.
No defence industry can be built without careful nurturing from the government. If Russia builds some of the world's best fighter aircraft, while being unable to build a decent passenger car, it is because Moscow has spent decades on an aviation production eco-structure while leaving the automobile industry to develop itself. While the private sector has been allowed into defence production since 2001, entrepreneurs have been expected to build their own capabilities - with the ministry of defence (MoD) playing little role in co-ordinating, mentoring, funding or monitoring. Without any funding support for the risky and high-cost research and development, or R&D, that underpins defence systems, and without any assured orders for the weaponry that they develop, why would firms invest? Complicating matters even further is the maze of regulations. Companies cannot build or import ammunition without obtaining time-consuming permissions. No weaponry can be test-fired since the government controls all firing ranges. A range of tax benefits that have been extended to the moribund defence public sector units are denied to private companies.
The MoD must bring together the military, the Defence Research and Development Organisation and the defence industry to identify at least 100 R&D and production projects that will feed into weapon systems that India can realistically build. This will need the MoD to declassify a sanitised version of the military's Long-Term Integrated Perspective Plan, which identifies the capabilities that the military needs to build. The MoD had promised to release a public version of the plan a year ago, but even today the defence industry remains in the dark, with no indication of what systems or sub-systems it should develop and build. Finally, once these projects are identified, they must be allocated to public and private defence players following transparent and fair bidding. This is already provided for in the Defence Procurement Policy, which permits 80 per cent funding by the government, with the defence company paying up the balance. Astonishingly, while the MoD's Acquisition Wing has informally identified a hundred "Make" category projects, not a single one has actually entered development. A year ago, the MoD's Acquisition Wing head had announced that 150-180 "Make" category projects would be identified and put up on the MoD's website. But with nothing having been done towards this, and with the defence budget for the next year slashing funding for this, indigenisation is set to remain a slogan rather than a reality.