Why India does not make arms

Union Minister for Defense AK Antony has spoken of reorienting defense acquisition priorities from foreign vendors to domestic capacity-building as an urgent priority. This is a noble sentiment but unlikely to happen. Deep structural impediments prevent India from developing its own weapon systems in the near to medium term. There is at the outset the issue of strategic direction. The Defense Research and Development Organization is a behemoth with over 50 research labs producing everything from fruit juice — they gave us the Leh berry to Intercontinental ballistic missiles. The delivery of the latter has been promised at a future date; meanwhile you can sip the juice. India imports everything from bullets to aircraft carriers. According to Stockholm International Peace Research Institute, a think-tank that monitors international defense trade, India’s annual arms imports doubled from $1.04 billion in 2005 to $2.1 billion in 2009. It doubled again between 2009 and 2012. India imported an estimated four billion dollars worth of weaponry in 2012, making it the world’s largest importer of defense equipment. While big-ticket items, such as a nuclear submarine leased from Russia or fighter aircraft Rafale under negotiation from France, get all the airtime, the shocking truth is that India is a big importer of mundane items like bullets and even socks and underwear for high altitude regions. What accounts for such utter dependence 60 years after independence? The answer is straightforward. The system for military production and the procedure for procurement have been untouched by reforms. Public-sector firms such as the DRDO and the Hindustan Aeronautics Limited are in a time warp, with an unfettered and unchecked mandate for making weaponry in India. The results have been a disaster. Often, technology transfers are not absorbed as these firms lack the necessary capability to do so. Time over-runs are routine and cost over-runs are a scandal. To take just one example, India’s efforts to develop an anti-tank missile called Nag started with a budget of Rs 380 crore, which ballooned to Rs 1,700 crore. Yet the missile did not pass muster in field trials, with three of the four missiles fired missing their targets in extreme heat conditions. The same pattern repeats from the Kaveri engine which has a cost overrun of 800 per cent and will never fly a jet fighter to the Tejas fighter aircraft (with American engines) that has had more deadlines missed then sorties flown. There is almost no oversight save the Comptroller and Auditor-General’s reports concerning India’s defense production. The conflict of interest is so stark that the chief of DRDO is traditionally the Chief Scientific Adviser to the Prime Minister. Thus, he is in charge of both production and oversight. With that being the case, it is no wonder that defense production in India gets very little by the way of a serious review of its flaws. The failure of Tejas is the most glaring example. Successive DRDO heads backed the aircraft it was supposed to replace — the ageing MIG 21s. But it has yet to be certified. Meanwhile, India has lost precious lives of pilots to technical faults of aging fighters. This blasé attitude of the country’s apex defense production organisation has cost India both blood and money. The reason the Union Defense Minister sounds hollow on developing Indian capacity in armament manufacturing is a report gathering dust since 2007 in the innards of the magnificent citadel of South Block. Named the Rama Rao Committee report, it called for greater participation of the private sector in defense and urged the Government to involve clients — the Armed Forces much more closely while undertaking research and development of weapons. Why this report has not been implemented, is a question only Mr Antony can answer. The recent move to allow 49 per cent foreign direct investment has proved to be a tentative step. The Government has developed cold feet and decided to peruse this policy only on a case-by-case basis. What is more, it has added the role of foreign investment promotion board along with the Defense Ministry. This will only add red tape and discourage investments. It is no wonder that total foreign direct investment in defense in India since 2000 has been only Rs 25 crore. Private Indian firms have acquired critical mass and shown interest in defense manufacturing. Firms such as L&T, involved in India’s nuclear submarine project, the Tatas, Reliance and others are interested in the defense sector. What they lack is proprietary technology. One way of channeling that to India is to allow 74 per cent FDI in the sector. That will reassure global firms to trust India with its technology. Doing so will bring down Indian costs and develop Indian capability. This should be undertaken at the earliest. It’s time the country’s defense sector truly opened up.