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Assembled in India

We will remain the largest buyer of foreign weapons until the defence sector is privatised, writes Pramit Pal Chaudhuri.

india Updated: Apr 01, 2012 23:12 IST
Pramit Pal Chaudhuri

The ministry of defence should rename itself the ministry of imports. India earned the undesirable honorific of being the world's largest buyer of foreign arms in the latest 'Trends in International Arms Transfers' report. The ultimate oxymoron in New Delhi today is 'defence self-reliance'. This state of affairs will continue so long as the ministry continues to believe in the State-owned defence sector.

India's imports of defence equipment surged 38% to $12.7 billion from 2007-11, say the authors of the report, the Stockholm International Peace Research Institute (SIPRI). The only better defence growth figures? Number of speeches by defence minister AK Antony declaring self-reliance to be his goal.

At the time the report was released, Antony spoke at the Defence Research and Development Organisation (DRDO). He complained that DRDO had "many deficiencies", that it was "slow" in implementing recommended reforms. A few days earlier he called for change at Hindustan Aeronautics, another stalwart of India's government defence industry whose core competence is assembling imported airplane kits.

SIPRI's report underlines the true trend in India's defence industry. Namely, that the louder the mantra 'self-reliance' is chanted by defence officialdom, the further the goal moves away from India.

It's not just that the Indian defence sector can't build simple trainer airplanes or armoured vehicles. It even struggles to design usable rifles or make good boots. "Indian soldiers", says Commodore Uday Bhaskar of the National Maritime Foundation, "prefer to buy their uniforms from private tailors rather than wear free government issue".

Antony's criticisms should mean that his office at least understands the problem. But the reforms the ministry advocates are, ultimately, about preserving the defence sector's commanding heights for the State-owned firms. And it's this "tweak the status quo" mindset that ensures India's security increasingly depends on how fast it can import.

Rising Indian arms purchases and stiff offset requirements - roughly half the cost of foreign purchases must be outsourced to Indian firms - means billions of dollars' worth of contracts will float out of the windows of South Block. Antony is asking DRDO and company to get their act together so they can cash in on this bonanza.

The ministry's hope is that these State-owned firms will absorb some imported technologies, recycle them and preserve the myth of indigenous defence production for another decade. The subtext to Antonyspeak should be: you need to change so you can keep pulling the wool over India's eyes.

The defence ministry loves the term 'technology transfer'. These are weasel words. Every study shows this to be a way to temporarily get obsolete knowhow. Transfers are like cheat-sheets. They keep you from doing the hard work of really learning something. The State-owned defence firms are like students who mug enough to get past each exam and graduate with blank minds.

In 2005, DRDO spoke of making 70% of Indian defence equipment at home. But the figures haven't change in all these years, says Air Vice-Marshal Kapil Kak of the Centre for Air Power Studies. "Government stonewalling has meant there has been no energising of the defence sector." Officially, India is at 30% indigenisation. So much of this is screwdriver work, says Brigadier Gurmeet Kanwal of the Centre for Land Warfare Studies, "That the actual figure is 20% or less."

The Tatra truck, left-hand drive after 25 years, is only a more glaring example of this import-and-assemble game.

Antony and the ministry offer lip service to private sector involvement . But they have done little to make defence production attractive to such firms. Their vision is one of private firms serving as subcontractors to State-owned firms.

The Indian private sector is almost seen as the Enemy. Defence officials admit Hindustan Aeronautics prefers India import rather than get the Indian private sector involved. Such is their fear that India Inc will marginalise them.

In effect, India spends to maintain the military-industrial capacity of others who are too decrepit, like Russia, or too small, like Israel and France, to stand on their own feet. India's government defence firms serve as their cutouts. At the Prime Minister's Office, it is fully understood that the lack of an indigenous defence sector with real innovative capacity makes a mockery of India's great power ambitions.

Defence ministry mandarins are not wrong in claiming that in 90% of the contracts, Indian private firms don't have the capacity. What is needed is a long-term policy of developing exactly that. This would require the military to produce stable, long-term plans regarding arms procurements. The present system, especially prevalent in the army, of piecemeal and ever-changing weapons orders inflates prices and keeps Indian businesses away.

It would require the ministry to allow Indian private firms to be junior partners in ventures with overseas firms. "Foreign collaboration is needed for design knowhow," says Vice-Admiral Premvir Das of the Aspen Institute of India. Indian private defence companies are the first to say this is the best means to absorb military tech and grasp the crown jewels of defence knowhow - complex processes like systems integration.

There is no doubt that India's private manufacturers can produce the sort of engineering components even high-end fighters require. They have shown this in the automobile sector, notes Kak, where they produce components that match Japanese and German precision.

Combining this manufacturing capacity with India's software sector - half the cost of advanced defence systems is binary code writing - the foundations for a competitive arms business can be laid. The other path: decades more of Buying Foreign, Faking Indian.