Ambitious goals for defence

If India is to have any chance of doubling exports, it must first recognise exports and production are two sides of the same coin

At the Defence Expo held in Lucknow recently, Prime Minister Narendra Modi exhorted Indian manufacturers to double defence exports to $5 billion (Rs 37,000 crore) over the next five years. Around the same time, reports indicated that a major private sector company aspiring to become a producer of military platforms had gone into liquidation, forcing the government to en-cash all its bank guarantees. These two developments are incongruous and require some discussion.

In 2011, the Indian Navy placed an order for five Offshore Patrol Vessels (OPVs) with a private sector entity, the Pipavav Defence & Offshore Engineering Company. These vessels, the simplest of all naval platforms, were to be built at a cost of Rs 2,500 crore and delivered starting 2014-15. By 2015, this company had stopped functioning and was taken over by Reliance Naval and Engineering Limited (R-Naval). In July 2017, R-Naval actually launched two OPVs, though these were nowhere near the final stage of construction. The company, which spelt out grandiose plans for manufacturing advanced warships and submarines, has filed for insolvency.  The Ministry of Defence has advance payments made for the ships amounting to Rs 980 crore but the ships are nowhere on the horizon. The order has been cancelled and no deliveries have been made. Yet, if any naval platforms have a chance of getting exported, the OPVs would be at the very top of that list.

This, of course, is the naval experience. Another privately-owned shipyard has also struggled to remain productive, but with little success. Only Larsen and Toubro has made headway, first by fabricating hulls of our nuclear submarines and then by building a few conventional but simpler ships. The picture in the other two arms of the military is no different. The private sector is far from manufacturing even the simplest aircraft or helicopter. In fact, even Hindustan Aeronautics Limited (HAL), the public sector unit assembling sophisticated fighters under a licensing agreement for decades, cannot produce these platforms in sufficient numbers to meet the needs of our own Air Force. The question of exporting any of these then does not arise. In two categories where the design is our own — viz. the fighter Tejas and the Advanced Light Helicopter  — the capacity is well short of our own military needs. To expect serious enhancement in production with existing capacity is too ambitious. So, there are no air platforms for export. As for the Army, the one indigenous platform is the Arjun tank, but its weight and manoeuvrability are not suited for most countries; many other systems, such as BMPs and T 90 tanks, are assembled under a licence and, therefore, export is unlikely to be allowed. In short, India does not have a military platform that can pass the test for being developed as a potential export item. One possibility is the M77 howitzer gun being manufactured by Mahindra Defence Systems in collaboration with a US company, provided the contract allows for it and the requirements of our Army are first met. This leaves smaller items such as rifles, ammunition, grenades and light artillery for exports. It is unlikely that these, even if substantially enhanced, can help get us to the target that has been specified. I am assuming that missile systems like Agni, Prithvi and Aakash are not figuring on the export list. Where do we go from here is a question that merits examination.

Illustration by Binay Sinha

All defence public sector undertakings (DPSUs) have been in the business for many years and have acquired skills and knowledge even if these are not enough to meet the needs of our military, either in quality or quantity or both. These capacities take time to be absorbed and to expect that private sector companies will not be subject to the same time constraints is to be simplistic. Merely tying up with a foreign manufacturer will not replicate its capacities in India in quick time; in any event, why should any prospective client not prefer to buy the item from the original manufacturer itself, say, Lockheed Martin or Boeing? In this context, the choice lies between strengthening the DPSUs,  which already have capacities, howsoever unsatisfactory these might presently be, and to invest more proactively in the private sector, treating them as start-ups—literally. There could be a combination of both.

Existing policies require identification of a specific Indian partner who would then collaborate with the chosen foreign supplier. As already mentioned, neither a DPSU nor a private sector company can adequately meet this major technological challenge. The answer is to combine both into joint ventures, which could then collaborate with the original manufacturers. This is easier said than done. The operating philosophy, work culture and discipline of both are miles apart and, while the first strives to meet targets set by the user, the second has profit as its prime motivation. Often the two might not coalesce. Only stringent policies when strictly implemented can overcome this dilemma and it is not certain if the political will or ability to enforce both is currently there in the government. So, prospects of India becoming a credible manufacturer of defence platforms or major weapon systems for export are remote.

Fundamental to our inadequacy is the inability to  design platforms and equipment needed by the militaries. There is some of this expertise in the Navy nurtured over decades but none in the other two branches where this work is the responsibility of the Defence Research and Development Organisation, whose strengths, though, are primarily in the sphere of missile systems. As such expertise will never be transferred by foreign suppliers, our first and foremost priority must be to focus on generating this capability; without it, we can never become self-sufficient in the field of defence hardware, much less be able to export to others. 

The writer has served as Director General, Defence Planning Staff, and has been a member of the National Security Advisory Board