Bharat Karnad: Not in the spirit of indigenisation

Notwithstanding the achievements of those such as APJ Abdul Kalam, the govt should stop mollycoddling defence PSUs

The stellar achievement of the late APJ Abdul Kalam in the national security sphere was the Integrated Guided Missile Development Programme (IGMDP) responsible for the Prithvi and especially, the very advanced, highly accurate and lethal Agni series of ballistic missiles. Along with nuclear warheads/bombs designed and produced in Trombay, and the Advanced Technology Vehicle project that begot the Arihant-class nuclear-powered ballistic missile-firing submarine (SSBN), the IGMDP has created a paradox: India is self-sufficient in strategic armaments and long-range delivery systems but is an abject dependency with regard to conventional weaponry.

The thing about strategic armaments is that no country would sell India nuclear weapons, SSBNs, or long-range missiles. This restricted options and narrowed the government's focus. India could either design, develop, and manufacture these systems on its own through whatever means, however long it took, and at any cost or, decide to do without them and relegate quietly to the ranks of fringe players in international affairs.

Having chosen the difficult path to indigenously secure the delivery systems to complement the nuclear weapons capability Jawaharlal Nehru had nursed with care and strategic foresight, Prime Minister Indira Gandhi in the late 1970s and early 1980s followed it up by removing all procedural and bureaucratic hurdles to locally designing, developing, and manufacturing these high-value systems. The projects in "mission mode" functioned autonomously, freed from the defence ministry's rules and procedures. There were no unrealistic staff requirements as compendiums of cutting-edge features culled from glossy Western brochures, no requests for proposal, and no "L1" lowest tendering process and its attendant absurdities. Moreover, as outcomes-oriented projects every encouragement was given to the stewards, such as Kalam, of these sensitive strategic programmes to tap in-country resources wherever these might be found, with none of the oppressive financial oversight fixated on saving the country a few rupees while losing India its strategic independence.

Thus was created India's own mittelstand - small and medium scale enterprises that produce everything from highly efficient fuels with specific burn characteristics for missiles and Isro rockets, high-tech components, to anechoic tiles as outer skin for nuclear submarines to avoid detection by sonar - all achieving of the highest quality by means of experimentation and trial and error. It is an astonishing story of local ingenuity flowering due to the freedom, trust and financial support to create, reverse-engineer, and innovate top-order technologies. These are also the programmes wherein versatile private sector firms proved their druthers by, for example, learning flawlessly to handle titanium metal using plasma welding techniques to engineer the SSBN's double hull.

In contrast are the conventional armaments projects bedevilled by every systemic ill imaginable, including legacy mindsets of the Indian military. In the 1950s, with the indigenous Marut HF-24 supersonic fighter programme, the armed forces reconciled themselves to "going native".

However, the shock of the 1962 war defeat unhinged Nehru and his arms self-sufficiency drive. The imperative to quickly meet the immediate needs of the military with imports became the procurement norm. With the purchase in the 1980s of the Jaguar low-level strike aircraft, HDW 209 submarine, the Bofors howitzer gun politicians, and progressively, civil servants and military brass in the loop, discovered defence deals as sources of personal enrichment. Meanwhile, licensed production of imported weapons platforms became the speciality of the defence public sector units (DPSU). Except, the low-productivity DPSUs never progressed beyond the screwdriver/Meccano-level technology and came to be feared by the armed forces for purveying shoddy goods. DPSUs nevertheless flourished because the sole remit of the defence production bureaucrats in the defence ministry is to ensure their economic health. Hence, all production deals are funnelled to them, their already bulging order books notwithstanding; their "cost plus" calculus robbing the DPSUs of any incentive to bring production runs in on time and within cost.

The slothful DPSUs with unionised labour - the acme of socialist defence economics - geared only to assembling weapons platforms from imported parts without ingesting or improving the transferred technology the country has dearly paid for is mislabelled "indigenisation". Consider just one statistic: Hindustan Aeronautics Ltd, after 50 years of cobbling together over 800 aircraft, including variants of MiG-21, MiG-27, Hawk, Jaguar, and Su-30 combat aircraft and thousands of jet engines, revealed that 70 per cent of its production by value in 2014 constituted imports (three per cent more than in the previous year).

This imports-dependent, DPSU-dominated, defence industry is maintained by an atrocious ecosystem favouring foreign vendors. For instance, unlike Indian private sector firms, foreign companies are not compelled to factor currency fluctuations into their bids, and hence are incentivised to quote ridiculously low prices and win contracts, and which prices are subsequently permitted to be jacked up at will. Foreign companies also do not incur punitive charges and penalties for time and cost overruns of projects owing to delays in trans-shipping materials, tooling and expertise to DPSUs.

A multi-pronged solution is obvious enough: (1) Develop all armaments indigenously with dedicated mixed private and public sector teams in "mission mode"; (2) Concerning the minuscule list of urgently needed armaments, prevent foreign vendors from getting any advantage; (3) Let DPSUs and private sector firms with sophisticated designing and production wherewithal compete fairly for all manufacture contracts and transfer-of-technology benefits.

India has to stop mollycodding DPSUs, wasting the sophisticated built-up capacities in the private sector, and sustaining the defence industries in the US, Russia, Western Europe, and Israel by reflexively buying armaments abroad.

The author is a professor at the Centre for Policy Research