Uncertain outcomes from Sitharaman’s latest Defence industrial reform announcements

Broadsword: DRDO looks beyond HAL for Tejas production

[Tejas assembly line]

The announcement by Finance minister Nirmala Sitharaman that there would be a “ban” on imports of armaments was music to my ears and meant that something I have long been advocating had finally come to pass. This was so until she qualified her remark by adding that the Defence Ministry would produce a negative list of weapons systems whose imports are barred and that there’d be deadlines for each of these items from when this ban will come into effect. So an escape hatch has been left open for the armed services to continue sourcing their high-value hardware/software requirements and keeping them out of this list. Should the Services fail to convince the defence ministry on this, they will no doubt endeavour to extend the deadlines so that most of the arms import transactions in the pipeline come in under the wire.

The point is not that reasons cannot be adduced for this or that military product to not be on this list. But rather that such a course of action will be used by the armed services habituated to “buying foreign” to persist with this habit. As a result, even a modicum of self-sufficiency will be hard to achieve. Because it is certain the Services HQrs will fight tooth and nail to ensure that their main weapons platforms — main battle tanks, combat aircraft, diesel submarines, helicopters and ballistic missile defence systems and the like, inclusive of their associated electronics, and systems and sub-systems, remain outside the negative list. It could, in effect, leave the country still forking out enormous amounts of hard currency to foreign suppliers even as the process to make India self-reliant stays unachieved.

One can only fervently hope that the Modi government will be rude and ruthless in first enlarging the list of defence items that cannot anymore be bought from foreign vendors and, simultaneously, nullifying or at least drastically pruning the underway deals.

Given the capabilities especially in the private sector — navy’s Project 75i cannot, in the context of nuclear submarine building wherewithal in-country, be permitted to import other than the design and certain highly specialized technologies, such as mast optronics from competing submarine builders (Rubin Bureau of Russia or DCN of France or ThyssenKrupp Marine of Germany); there’s absolutely no need for importing self-propelled and towed artillery, or tanks when there’s the Arjun MBT to refine and design-wise down-scale to obtain a 30-ton light tank for Tibetan plateau use prospectively by the offensive mountain corps; and even less point to flying in foreign combat aircraft to fill the IAF’s MMRCA fleet when there are Tejas derivatives, such as the AMCA to fast forward. For sure, there’s need for foreign assistance in re-working the Kaveri jet engine and there’ll be no dearth of companies competing for India’s custom. But that doesn’t mean the country has to buy a combat aircraft with it. Which is to say that the procurement principle the defence ministry should follow is to buy the specific technology India is deficient in, not the whole damned weapons system package that gets us nothing and in the bargain loses us our purse!

Moreover, with the private sector leading the charge the country is primed to realize inside of 5-7 years Prime Minister Modi’s goal of ‘atm nirbharta’ in weaponry if he is serious about it. But this will require the Indian military and government, as I keep iterating, to trust in Indian talent and invest in Indian programmes to deliver the most sophisticated military goods.

The danger to attaining the above goal is in Sitharaman’s announcement of the other defence industry-related reform, namely, the raising of FDI limit to 74%. The expectation apparently is that foreign arms manufacturers allowed to set up shop freely and with no prior authorization, will jump at the opportunity. Not so fast, Speedy! There would be no problem and such ventures would be welcome if foreign defence companies set up their arms production plants here, and benefit from labour cost advantages, using India as a manufacturing hub mainly for exports. They may be induced to do that only if GOI also allows them guaranteed sales in India. This could lead to foreign vendors setting up factories to dump a whole bunch of obsolete or fast obsolescing weapons/platforms by assembling them here for the Indian armed services, thereby pushing off into the indefinite future the possibility of the Indian military becoming technologically in-date and consequential.

Thus, Lockheed, for instance, which has already tied up with Tata to produce in India the F-21 (the vintage F-16 by another numeric) will come in fast and try and seal a deal with the IAF. From the Washington end Trump can be relied on to do the pushing which our main man, Modi, is unlikely to resist, he being only too eager to please Trump at every turn. (Refer the PM’s expressing his gratitude yesterday to Trump for his promise to send, unbidden, some excess ventilators the US has no use for possibly because these Chinese-produced items have been found to be defective!)

But there are larger issues here that remained unaddressed by Sitharaman. 70% equity and controlling shares is all very well, but before foreign Original Equipment Manufacturers take up the offer, won’t they insist, as regards labour, on hire and fire practices prevailing in the West and elsewhere so they don’t ever get stuck with a low productivity workforce they can’t be rid off? And won’t these foreign firms also insist on ‘one window’ clearance for all permits, local level up, so they aren’t mired in red tape nor compelled to function at the sufferance of defence production babus as Indian companies are forced to do? And further, will the potential investors not demand that the land acquisition be simplified and facilitated which will need the centre and the state governments to be on the same page? The Finance Minister said nothing about any of these things. Result: There’ll be some uptick in foreign interest but no rush into India from foreign quarters, unless they too get the sort of consideration that Lockheed is banking on.

Revamping the land and labour laws, rules and regulations, is a prerequisite for the country becoming a workshop to the world. The Modi regime has done next to nothing in the last 6 years in these respects, other than floating the ‘Make in India’ rhetoric, but still wants India to become a manufacturing station servicing global needs. So much for building a house roof down!

About Bharat Karnad

Senior Fellow in National Security Studies at the Centre for Policy Research, New Delhi, he was Member of the (1st) National Security Advisory Board and the Nuclear Doctrine-drafting Group, and author, among other books of, 'Nuclear Weapons and Indian Security: The Realist Foundations of Strategy', 'India's Nuclear Policy' and most recently, 'Why India is Not a Great Power (Yet)'. Educated at the University of California (undergrad and grad), he was Visiting Scholar at Princeton University, University of Pennsylvania, the Shanghai Institutes of International Studies, and Henry L. Stimson Center, Washington, DC.
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37 Responses to Uncertain outcomes from Sitharaman’s latest Defence industrial reform announcements

  1. ARINDAM BORA says:

    Cut them some slack, Sir. They have only announced their policy decisions. Let us wait and see how things fan out. By the way Sir what is your opinion of the Army’s new proposal for three-year Tour-of-Duty (ToD) scheme and recent statement about integrating naval assets into the Chinese border theatre commands ?

  2. S Paldas says:

    How is this the Tejas assembly line? Looks like the Eurofighter Typhoon

  3. V.Ganesh says:

    The Tatas’ unsuccessfully tried to merge Tata Steel in Europe with Thyssenkrupp’s steel business. Is there a possibility of Tata and Thyssenkrupp’s forming a JV company to participate in the Indian defence market?

  4. V.Ganesh says:

    Trump has now sent a message to US companies by targeting Apple that he’d tax them more if they were to not shift back to the homeland when exiting China in the times of the Chinese Corona Virus. So, does that put the Tata-Lockheed Martin and the Boeing-Mahindra-BEL JVs in jeopardy which planned to manufacture in India if they won MMRCA 2.0?

  5. V.Ganesh says:

    Will Egypt and Qatar leak the secrets of the Rafales operated by their AFs to Pakistan [because IAF is getting 36 Rafales and also because for all these Islamic nations, irrespective of the Shia or Sunni Islam followed by them, all that matters to them while helping a fellow Islamic nation is their religion Islam] and especially Qatar whose state-owned Al Jazeera refuses to even acknowledge Pakistan-sponsored cross-border terrorism and instead calls the jihadis sent and supported by Pakistan as rebels?

  6. Shrey Srivastava says:

    There is no link for the information about US sending Chinese manufactured ventilators to India, Can you share it Sir?

    • There are reports — Google them — about ventilators from China being found faulty. Considering that COVID-19 is still to peak in the US and the demand for ventilators will rise, I concluded reasonably that these machines found deficient by some of the American states they were dispatched to, may be the ones Trump will likely forward to India (assuming Modi accepts them).

  7. Rakesh Sharma says:

    Dear Bharat Karnad,
    1. Armed forces don’t like buying from outside. Given an equal choice, they would always prefer the indigenous weapons. It is the politicians who are more fond of foreign weapons due to obvious reasons.
    2. This may not be music to your ears, but Armed Forces don’t have to delay any psu project, the delay is inherent in the way our country functions. Delay in allotment, delay in design and development by Drdo, delay in fielding for trials, delay in rectifying the defects observed, delay in clearances, delay in production, delay in inspection and delay in delivery.
    3. When you are fighting an adversary, he doesn’t give you any bonus for using indigenous weapons. If your weapon doesn’t hit him before he hits you with his, he will not pretend to b dead because you used an indigenous weapon.
    4. Lastly, I hope the laptop/mobile you used was indigenous and not made in China.

    • That is why I have recommended in my latest book (‘Staggering Forward’) that in the period during which indigenous industry comes up to pace in the advanced conventional weaponry field India’s military weakness be alleviated by more aggressive use of nuclear weapons, vis a vis China, by threatening and preparing for first use, to deter PLA from exploiting this weakness. Whence my suggestion for emplacing atomic demolition munitions in likely avenues of PLA ingress in the mountains and of forward deployment of ‘short fuse’ SRBMs. This is a strategy that was used against the US by China until their defence industry came of age in the last decade, and by North Korea today. It is also used by Pakistan against us.

  8. PRATIK KUMAR says:

    Hi Bharat sir. Sir in one of the reforms proposed by FM, there is a proposal for India to become global hub for aircraft maintenance, repair and overhaul followed by convergence b/w defence and civil MROs. But sir don’t you think here that India will only become a garage or some kind of scrapyard for foreign airlines companies as they will simply use our cheap labour for the maintenance of their aircafts (civil and military), and no transfer of tech, no R&D, and only create few blue collar jobs . Further there is no focus on embraer. So does it not appear very narrow mindset of our govt..having focus only on secondary economic sector??? I can’t see any real reform here…

    What is your viewpoint sir?

  9. ARINDAM BORA says:

    Sir, will you consider writing a piece on the recent Chinese incursions and scuffles with Indian forces across multiple sectors ? Also will you present a complete picture of LAC incursions and PLA motives by analysing the links between the present round and the 2013 Despang Plain incursions ?

    • The situation on the LAC hasn’t “ripened”. After a renewal of the pushing-shoving matches things are tense but not over the top yet.

      • ARINDAM BORA says:

        Sir but what about the gradual nibbling away of Indian territory in the Ladakh sector by the PLA ? This has been going on since 1956. If a settlement were to ever happen with the acceptance of the LAC as the international border then that would lead to India actually losing more territory than just Aksai Chin.
        It seems that the Chinese are free to challenge and change the status quo whenever they want, manufacture territorial disputes as they see fit build infrastructure in POJK, embarrass India at international forums, use their proxy Pakistan to contain and bog down India etc..
        What is our China Policy, Sir ?

      • But this sort of piecemeal loss of territory, as I have long argued, is inevitable on the LAC with our passive-defensive strategy.

      • ARINDAM BORA says:

        Then what strategy would you suggest ? Pardon me, for I am not familiar with all your writings.
        I am asking about the strategy to be implemented on the ground by our forces, sir. I don’t see how nuclear missile arming Vietnam is going to change the status quo on the LAC. On the contrary it would make the Chinese even more hostile.

      • If you are not familiar with my writings then become familiar! Very, very briefly then ( and for the last time!) have detailed in my ‘Staggering Forward’ book a strategy of nuclear first use threats and posture to deter PLA at a time of manifest overall Indian conventional military inferiority. This means use of atomic demolition munitions in Himalayan Passes, and forward deployment of N-sort range ballistic missiles as tripwire.

    • PRATIK KUMAR says:

      Hi Arindam, if you want to know about Bharat sir’s writings, then you can watch all his videos on youtube. These are fantastic videos and great eye openers. You will get all his views there. And I am writing to u here bcz there’s no reply option in your last comment.

  10. RG says:

    Should you be writing on china right now?

    I think they must be regretting not listening to ur suggestion of placing low yield nukes there,

    India is not making any noise whereas they have blamed us, are they setting the narrative?

    They have studied Gen Zorawar’s earlier offensive plans indepth, are we interested in any such proactive learning about their ways , to win?

    Is CCP stressed and blowing steam?

    Why did they make a meek statement earlier on (statement of some senior research fellow in global times.)and now have completely changed track(statement statements by global times editor)?

  11. V.Ganesh says:

    What do you think about this https://theprint.in/defence/iaf-chief-contradicts-cds-rawat-says-plan-is-to-buy-114-foreign-fighters-besides-lca-tejas/424468/?amp with the CAS contradicting the CDS? I guess the CAS didn’t like the CDS encroaching on his turf. Or is there more at play here?

  12. V.Ganesh says:

    Why don’t you recommend Pierre Sprey to the CAS, the CNS and the GOI so that he can help build a new fighter jet for the Indian Air Force and the Indian Navy just like Kurt Tank did?

  13. V.Ganesh says:

    Do the Indian Navy and the Indian Air Force have aggressor squadrons like the US Navy and the USAF which simulate enemy fighter jets? The US Navy in the past sent its Boeing F/A-18 E/F fighter jets to participate in exercises against the German Luftwaffe’s MiG-29s, the only Soviet/Russian-origin fighter jet with a NATO member.

  14. RG says:

    Mr. Karnad, apologies for my articulation ,and I hadn’t read the earlier comments.

  15. Debanjan Banerjee says:

    Thanks a lot Mr. Karnad for another thought provoking article of yours. I would love to know your opinion on the ongoing India-China border skirmishes in Laddakh and Sikkim as well as Nepal’s current spat with India over territory. Do you believe that this current problem between India and Nepal would lead to India losing out on our brave Gorkha troops since Nepal may sell them to the highest bidder the PLA in this regard. Thanks and regards with best wishes. Debanjan

  16. dxrickss says:

    Is this true? Chinese forces are building defenses in Indian territory?

  17. PRATIK KUMAR says:

    Hi Bharat sir. just wanna ask a different question. Sir recently I read in a report that US Navy has unveiled its first AI based warship. Its maintenance cost drastically reduced than its conventional counterparts. So my question is sir don’t you think that India too, instead of buying 114 MMRCA (simply waste of money), should focus on indigeneously developing AI based fighter jets (LCA derivatives). These AI based weapons are the future, and they are thin, mean, deadly and almost unstoppable. (I read in a report that in simulated combat b/w USAF and AI based drone, drone won everytime). And further these AI based fighters would also be cheaper. Also nations like US, Russia and China are investing heavily in AI weapons..

    I m not saying that AI weapons should replace conventional ones, but looking at future, India must invest in AI based machines and for this private sector should be called upon.

    What do you say sir?

  18. Sai says:

    Sir waiting for your thoughts on the latest move by china in border.

  19. PRATIK KUMAR says:

    Hi Bharat sir, just a small and general question. In WMDs, which is the most destructive weapon (nukes or bio)?. I still think nukes are the most destructive weapons, more than any other weapon. Even the researched reports on nukes say that even a 100,15 KT nukes could devastate 2 billion people, causing global catastrophe, and total no. of nukes are enough to wipe out whole population many times, considering their environmental impact .

    Anyway I just wanna know your views in this regard sir.

    • Instant death and destruction with ThN-Bomb Vs long duration, hard scrabble, struggle with a Bio WMD.

      • PRATIK KUMAR says:

        Ya that’s fine sir. For thermo nukes , there will be massive no. of instant death and devastation, but its radiation will last for several decades causing global ecological devastation leading to extreme global food crisis and nuclear winters…and such like. That’s why the report said that nukes are enough to destroy whole population many times over.

        Anyway thanks for replying sir.

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