The Urgent need for ‘Make in India’ in defence
Defence Equipment and Technology are critical to safeguard national interests. Maintaining technological superiority can only be made possible by focused development in defence systems. Currently, India spends around $40 Billion on defence. We are the second-largest importer of defence equipment with an import bill of around $5 Billion. On the other hand, India’s defence export is at $107 million, a mere 2% of the defence import bill. Reliance on import for critical systems is a potential security threat.
The complex geopolitical paradigm, it is essential to reduce dependence on weapons import. Along with convergence of interests, conflict of interests is part of the game. In such a dynamic environment best guaranty of safety can be self-reliance in defence manufacturing.
It is in this context; Development of defence manufacturing eco-system is central to Make in India. Self-reliance in defence serves the twofold purpose of Strong, Defence and Development (Industrial).
As in the case of America, strong defence eco-system has been instrumental in creating the culture of technological innovation.
The strong defence eco-system has given America technological edge and military superiority. Among 10 Largest defence companies, 6 are American. These US companies produced employment for 7,19,700 people in high-end manufacturing.
Defence Production in India
Industrial Production policy made it mandatory for production to be taken up only by the public sector companies. The policy resulted in a defence industrial base that consists of eight Defence Public Sector Undertaking (DPSU) and nearly 40 Ordinance Factories. In addition, there are nearly 50 R&D labs and establishments under the Defense Research and Development Organization (DRDO).
For the first time Government opened the defence sector to Private participation with foreign direct investment up to 26 per cent in 2001, subjected to a defense production license. Recently that FDI limit has gone up to 49 per cent.
Post-2001, Major Indian Companies initiated cautious entry into defence production. Recent FDI push and Government’s resolve to support the defence industry saw major corporations going for capacity development to serve India’s strategic needs.
Recently, the Ministry of Defense (MoD) initiated price negotiations with Heavy Engineering Major Larsen & Toubro (L&T) for 100 modified K-9 Vajra (self-propelled howitzers) for $800 Million. Vajra is a joint venture between L&T and Samsung (S. Korea).
Industry Majors like RIL, Tata, Mahindra are in the race to provide solutions in aerospace, electronics, Internal Security Systems, land-based systems and missile systems. There is a heightened enthusiasm, confidence and urgency in the industry.
Indian Micro, Small, Medium Enterprises (MSME) Scenario
Micro, Small and Medium Enterprises are integral to efficient supply. The Niche manufacturing capabilities of SMEs go long in achieving innovation at a lower price. Their flexibility in adopting advanced technic makes them a preferred partner in the entire supply chain.
MSME Examples
1. Cochin based Verdant Telemetry has been providing multi-platform Antenna System to DRDO, Israel Aerospace Industries, Thales (France) and Sierra Nevada Corporation.
2. Dynamic Systems have been providing airframe components to foreign defence companies including Boing, Airbus, Northrop Grumman and Bell Helicopters.
3. Data Pattern provides electronic warfare systems, navigation systems, hardware and software for aerospace and naval defence systems. Data Pattern has been supplying to BrahMos Aerospace, Bharat Dynamic, ISRO and MDL.
The MSMEs have been playing their role in producing equipment, components and sub-systems for Public sector undertakings and foreign Large Defence Corporations. With niche MSMEs in place, Major players can focus on big-ticket defence projects.
With the qualitative growth of MSMEs and Major players, Indian Defence Sector can look forward to defence exports to bridge the Import-Export gap.
These examples set the ground right for possibilities in the development of the Robust Defense Manufacturing Sector. Though, the biggest challenge will be integration, innovation and development of advanced technologies by leveraging private defence companies for faster result.
External Examples of successful Public-Private Partnership in defence
Case Study 1: Large Scale Defence Project involving Multiple Stakeholders
The Boeing X-51 – Technology Demonstrator for Hypersonic Missile System.
The Boeing developed unmanned scramjet demonstration aircraft for Hypersonic (6,400 km/h) flight testing. The program was a collaboration of the US Air Force, DARPA, NASA, Boeing, and Pratt & Whitney Rocketdyne.
It completed its first powered Hypersonic flight on 26 May 2010. X-51 technologies will be used in the High-Speed Strike Weapon (HSSW), a Mach 5+ missile planned to enter service in the mid-2020s.
Case Study 2: Outsourced R&D
EXACTO (Extreme Accuracy Tasked Ordnance), is a sniper rifle being developed for DARPA (Defence Advanced Research Projects Agency) by Lockheed Martin and Teledyne Scientific & Imaging.
The Defence Advanced Research Projects Agency (DARPA) is an agency of the U.S. Department of Defence responsible for the development of emerging technologies for use by the military. DARPA is a nodal agency that communicates with Private Defence Contractors and SMEs for advanced technological Research & Development in defence. DARPA identify and define defence requirements.
Case Studies 3: Journey towards Self Reliance – Turkey
In 2001, defence export from Turkey stood at $130 Million. With the aim of achieving complete self-reliance in defence, last year’s defence export stood at $1.65Billion. Turkey hopes to achieve defence export target of $25 Billion by the year 2023.
SWOT ANALYSIS – India’s Defence Manufacturing and Defence Industrial Complex
Strength
• Good Heavy Industry Base
• Strong Private Sector
• A large number of MSME
• Existing Public Infrastructure & Test Facilities in Naval, Ordinance & Aerospace.
• A strong network of Ordnance Factories
Weakness
• Lack of Efficient Integrating Ecosystem
• Lack of IP in the Private Sector
• Policy Implementation
• No Knowledge Sharing Framework.
• The industry is not well organised.
• Lack of Vision & Innovation
• very limited funding in R&D
Opportunities
• Defence Import of $5Bn
• Export Opportunities
• Technological Expertise can be useful in other sectors – dual use.
• Development of Knowledge Base/opening up job opportunities for all segment of acquired knowledge
• Ability to provide Security Umbrella
Threat
• Rapid Changing Technology
• Protecting Technology
• Implications for Foreign Policy
• Implications on Security
• Chances of Technological Surprises
Conclusion
The management policies, efficient decision making, agility, cost-effectiveness, supply chain and quality management are the strong points of India’s private sectors. On the other hand, DPSU’s, OF’s and DRDO have infrastructure for research and testing of defence technology. These factors are fundamental to the Development of Defense Industry in the long term.
Integration of the industrial base, SMEs, IT Sector, Public Infrastructure, academia and political will power shall go long in developing efficient defence eco-system.
In a democratic framework, leadership is a variable. We cannot guarantee the quality of leadership every time. Thus, it is vital to have a strong institutional framework (eco-system) to provide safeguards against human variable. Such a strong institutional framework with accountability and efficiency can provide the necessary ground for development. Current Government must deliver a strong institutional framework to lay the foundation for our future defence needs.
Make in India in Defence will serve the nation on various fronts. Clearly there are economic and strategic advantages attached. Defence Industry can create million jobs in the country. Most importantly, enabling environment of innovation will automate and accelerate the process of development through technological breakthrough. If Make in India can promote innovation, that’s the success story.
