The Defence Research and Development Organisation (DRDO), which shoulders primary responsibility for developing indigenous defence systems and capabilities in India, consumes 5.1 per cent of the Indian defence budget, which amounts this year to Rs 10,600 crore. This is modest given India's two-and-a-half front security environment (China, Pakistan and counter-insurgency), the Indian military's size (world's third-largest) and our regrettable status as the world's largest importer of weaponry (70 per cent of our needs). Over half this allocation comprises revenue expenditure, spent on a sprawling establishment of 52 laboratories and some 30,000 employees, leaving a mere Rs 5,000 crore for development projects.
While wasteful, this large DRDO establishment has been essential for as long as industry has not had the capability, money or incentive to emerge as a serious developer of defence equipment, or as a comprehensive ancillary supplier. The DRDO was forced to blaze multiple technology trails alone, developing materials, components, sub-systems and entire systems that went into a first generation of Indian weapons platforms - ballistic and guided missiles; the Tejas fighter; the Arjun tank; the Arihant nuclear submarine, etc - that are entering service.
But with each successive Defence Procurement Procedure allowing a larger role, and even design funding, to an increasingly competent private sector, the DRDO must evaluate alternative models. Like elsewhere, private sector vendors should take up system integration, while the DRDO develops the science and enabling technologies that give weaponry a cutting edge.
A model for the DRDO, even if only as part of its larger role, is the Pentagon's Defence Advanced Research Projects Agency. DARPA systematically develops "disruptive technologies" - radical inventions that change the game rather than mere incremental developments, such as Mark II into Mark III. Over the years, DARPA's innovations - including the internet, stealth technology, global positioning satellites, drones, and micro-electro-mechanical systems - have advanced the frontiers of military science and catalysed multi-billion dollar industries in civilian applications.
DARPA's success, as a recent Harvard Business Review article details, comes despite its tiny size (120 administrators in all); and relatively modest annual budget ($3 billion, or Rs 18,000 crore) that is dwarfed by the R&D budgets of US multinationals like Lockheed Martin and Boeing. DARPA selects its projects carefully, pushing the frontiers of science to solve real-world problems (for example, GPS for navigation), or creating battlefield opportunities (stealth technology). There is energy, urgency and purpose in a project that feeds into a larger system being developed elsewhere. DARPA itself was set up during a moment of national crisis, when the Soviet Union's surprise launch of the Sputnik in 1958 created an outcry over a "missile gap" with the Soviet Union. Since then, DARPA's simply worded mission has been: "to prevent and create strategic surprise."
How have so few done so much? By defining short-duration projects that must be completed in three to five years, and by assembling a temporary, mission-oriented team of top-drawer experts from diverse organisations specifically for each project. Setting a tight time limit is essential; a team of world-class experts cannot be assembled for long. DARPA's approach gives it an edge over traditional research organisations with captive employees. And DARPA can change the group make-up rapidly as technological challenges are overcome and new ones arise.
Team leaders are carefully selected - fixed-term technical managers who understand they are not spending lots of money on research in the vague hope that something good eventually comes out of it. Instead, their team must make a breakthrough innovation in a very short time, after which everyone can get back to whatever they were doing before. Former directors say that the intensity, sharp focus, and finite time frame of a project attract the top-notch scientists and engineers, who tend to collaborate closely in the quest for finite success.
Adding to DARPA's agility and low cost is the fact that it has no laboratories of its own. Project researchers and scientists work at their respective organisations, getting together at least twice a year to review progress and objectives.
The DRDO would benefit enormously from DARPA's approach to problem solving. Like all high-risk projects, DARPA projects encounter dead ends and surprises, but treat them as a tool for course correction. DARPA does not insist on development milestones because that encourages adherence to a research path that might no longer be valid. If an approach is simply not working, DARPA shuts it down and shifts efforts to another path. Those who sign up to a project understand that their participation might end if the science doesn't work, the pace of progress is not commensurate with other efforts, and ideas for how to make it work cannot be found.
Key to success is the project leader, who must be technically skilled and a natural risk taker, who can discuss a project with a military user, budgets with a finance man, a technical hold-up with a researcher, and intellectual property questions with lawyers. DARPA leaders are typically in their early forties, and rarely have MBAs. Business school skills - defining a market opportunity, framing a plan and then rigidly executing it - count for little when a leader must constantly re-plan, change tack and move talent in and out of a project in flux.
In India today, the DARPA model would face government and organisational inertia. But when the defence ministry understands that R&D expenditure must be accounted for, and when the DRDO assumes the role of R&D leadership rather than R&D ownership, defence R&D will enter a trajectory that might support an Indian DARPA.
Raghuram Rajan is correct - the RBI's monetary response to inflation in the past has been too weak