Genuine indigenization starting, now salute the two heroes

Genuine Indigenisation Starting In Arms Procurement; Two Heroes Deserve A  Salute For It
General Bipin Rawat & Lt Gen Subrata Saha

Consistent pressure to end arms imports from small select quarters (like this blog) has worked. Defence Minister Rajnath Singh this morning announced a negative list of military items that cannot be imported. Each type of goods has been assigned a timeline beyond which imports are banned. This list took some time coming, but is no less welcome for that.

On this list are items that, by and large, are already being produced in the country . This is fascinating because it reveals the range of production capability existing in the country. Even so, of the 69 items with the deadline of December 2020, 29 pertain to navy, 28 to army, and 12 to air force, and include such capital platforms as combat helicopters, light combat aircraft, missile destroyers, floating docks, and all manner of guns and radars. Of the 10 items that have December 2021 as embargo date, 8 relate to army and 2 to navy, including conventional submarines (Project 75i). Four items are listed with December 2022 as deadline, 3 belong to army and one category — ‘E(lectronic) W(arfare) systems” would be relevant to all the three services. Of the 15 types of equipment with the December 2023 date for full indigenization, 7 each are army and air force related, with “long range land attack cruise missile” that both air force and navy will want in their inventories. But this is only the first step.

Another list is to soon follow featuring more high value weapons systems and critical technologies, and the two negative lists together will give a fillip to the indigenous defence industry. While the Modi government’s intention is good and well meaning, considering pretty severe timelines in the published annexure, how are all these pieces of capital military hardware to be actually produced in mass in-country? How are the contracts worth Rs 4 lakh crores in the next 7 years the defence minister has promised to be actualized? Rajnath Singh hopes the private sector will pick up most of the work load. Larsen & Toubro, with prizeless experience in constructing nuclear power submarines and the only private sector firm with the competence and the shipbuilding wherewithal is a shoo in for the next generation of diesel submarines, for example. This is an unusually good fit but, for many reasons, it is an exception.

The reality is that the vast realm of defence public sector units (DPSUs), Ordanance factory Board units, and DRDO labs and research centres, is where the physical and manpower resources are concentrated. But much of this caboodle is a wasteland owing to low labour productivity, indifferent morale, and despicable work ethos. An arrangement to energize this sector with private sector project leadership is the answer. The best model to integrate a national resource base and utilize it is the one I proposed in a paper in 1998 for the Technology subcommittee of the first National Security Advisory Board of which I was member [and featured in my 2015 book ‘Why India is Not a Great Power (Yet)’].

In brief, this business model envisages dividing up all public sector physical assets along with work forces into two nearly equal defence industrial combines to be led by the two best and most versatile manufacturing sets of companies — Tata and L&T. The Government will continue to own the DPSU/Ordnance Board/DRDO physical facilities and will earn a rent and royalty for each item produced in any of them. Tata and L&T will be free to use their own resources in conjunction with those in the public sector that managerially they control. These two complexes will compete for every procurement contract from the military with the government funding development to the prototype stage. In the runoff between prototypes from both combines for any type of weapon system, etc the item that has less import content by value will be chosen, thereby incentivizing indigenous R&D. This is a viable business model the government should implement. It is specially attractive as it does not involve privatizing any DPSUs, DRDO labs, etc. — a move sure to generate very vocal political opposition.

Further, accelerated production of the Tejas LCA Mk-1A for the IAF, for instance, will require more than the two HAL production lines and necessitate the DRDO sharing the design and source codes for the Tejas LCA with several interested private companies willing to install their own assembly lines. There’ll then be economies of scale all round and enough capacity to not only produce sufficient LCAs for the IAF but also to spawn revenues from exporting this economical 4.5 generation fighter aircraft to a huge market in developing countries, and funds for developing the Advanced Medium Combat Aircraft and its variants on the anvil. All this is doable. It needs the strong willed Modi government to realize this self-sustaining business model.

Still, the fact that the government has articulated a negative list suggests it is finally getting through to the military and, importantly, the government that a dependency status in armaments for the country not just stamps India as a second-rate power but robs it of military options. It curbs a certain course of action in a crisis because initiating hostilities at intense pace would lead to Indian forces quickly grinding to a halt mid-operation because the stocks of ammo, spares and ancillaries have run out, and there’s no production capacity in the country to meet the surge demand of critical stuff. Whence the urge on the part of the armed services in a crisis to carefully husband resources and the available war wastage reserve and war stock rather than fight full tilt, when not trying desperately to avoid fighting altogether (as is the case currently in eastern Ladakh) .

A surge industrial capacity is the factor that enables more advanced countries with large defence industrial bases to fight long duration wars to a decision. It is illustrative of the problem the country has always faced, which no Indian government has sought to resolve, that in a military crisis almost the first thing the defence minister and ministry teams do is rush off to foreign supplier countries to make panic purchases of ammo, spares, and to make up the shortfall in weapons, and platforms, and end up paying a hefty premium for the goods so acquired. Rajnath Singh’s recent trip to Moscow to buy an assortment of military supplies, including Su-30MKIs and MiG-29s, underlines the point.

But surge production capacity comes on the coattails of an industry geared to meet the country’s military needs. If, however, the armed services are stuck in a rut, preferring imported goods and are, not just reluctant to acquire a stake in indigenous efforts by not committing institutionally to such weapons projects and programmes, but actively conspire to make life difficult for Indian manufacturers, then Modi’s atm nirbhar Bharat-plan is doomed.

The military’s outlook on indigenous armaments has been slow to change but is now changing because of a few nationalist-minded senior military officers driving the procurement dynamic from within the armed services.

Two officers in particular have played a stellar role in this process. General Bipin Rawat as army chief championed indigenization in the army — the senior, the largest and most influential service, and now as Chief of Defence Staff, is staying with the arms self-sufficiency mantra. But the real and substantive transformation of the army milieu was instituted by Lt General Subrata Saha, who retired as Deputy Chief of the Army Staff (Planning and Systems) in April 2017. It was during his tenure in Army HQ that the groundwork was laid for the involvement of Indian private sector companies in meeting the army’s materiel requirements. He removed procedural and bureaucratic roadblocks and established protocols and approaches that Indian companies, for a change, found conducive. Saha’s initiative, in one sense, eventuated in Rajnath’s negative list, and India is finally and belatedly setting out on the road to self-reliance in arms.

This is a heartening development. Three Cheers for Generals Saha and Rawat!! Their positive roles need to be recognized.

But Saha and Rawat notwithstanding, the deep down antipathy to indigenously produced military equipments is still rife in the military. The three armed services are differentially tuned to the ‘atm nirbharta’ drive. The navy is deemed by industry-wallahs to be the “friendliest” to private sector industry and indigenous goods, perhaps, because until recently its warship directorate was the only weapons platforms design agency in the Indian military. The army, thanks to Saha and Rawat, is now ramping up in this direction. The Indian Air Force, in contrast to its sister services, is the laggard, still has its “head in the sky” as an industry leader tellingly put it and, far from coming down to earth, the IAF brass is on an unwarranted high from the entry of the Rafale, and continues to swear by foreign aircraft. Given the current thinking of the government, Air HQ better get its head in the right place and give up the ghost of additional Rafales and the like, and invest fully in the Tejas, its variants, and the AMCA, instead.

The army is now on the right side of indigenization but even with Saha’s endeavours residual bad attitude remains. Here’s an example of how the army succeeded in frustrating an Indian company from proving that its product was qualitatively better than the foreign item the army procurement officials had set their sights on. An Indian company had produced an air defence radar that it claimed would more speedily and effectively spot a target with smaller radar cross section (RCS) at a longer range than the foreign favourite the army officers were tilting towards. Instead of flying its helicopters and aircraft against this radar to test its performance, which was their job, the army officers demanded the company do all this on its own, and otherwise thought up every ruse and put up every hurdle in the book and some to deny this company the opportunity to prove the high quality radar it had developed at its own cost was better than the imported maal!

In the early 2000s, the army, even more notoriously, had sidelined an army project headed by a bright army signals officer (Colonel KPM Das) which had within two years produced a cheap, tech innovation — a handheld device with a fluid screen — SATHI (Situational Awareness to be Handled by Infantry) based on the Bangalore-developed ‘simputer’. The simputer (or simple computer) project if the Indian government had pursued with vigour would have resulted in children in the remotest villages becoming computer literate by now for relatively small investment by the HR Ministry. The simputer was combined by the Das team with other off-the-shelf technologies to come up with SATHI. This device was able to fuse information from various sensors and sources and able literally to see round the corner, enabling infantry jawans — with mobile telephone handling skills — to avoid ambushes and friendly fire incidents. It was hailed as a revolution and a boon by troops in the field, especially those engaged in counter-insurgency ops. This project died, not owing to lack of funds, but because not a single senior Lieutenant General rank officer lined up to “take ownership” of it, and to shepherd its development through to operational induction.

Having discarded a successful in-house project that produced such a stellar product, the army may soon be in the market for just such an item. The foreign vendor in turn will likely put together the same technologies the Das-led team had done 15 years back, and sell it to the army at many times the price of SATHI! (For those interested in reading more about this case, it is detailed in my book — Why India is Not a Great Power (Yet), pages 321-323.) An exasperated Col. Das up and retired from service, only to be picked up by Cisco Systems as its Vice President!

The SATHI episode encapsulates India’s tragedy. And the limits of the government’s good intentions if the armed services are not fully on board.

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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18 Responses to Genuine indigenization starting, now salute the two heroes

  1. Any guess why the following are not on the list
    Light Utility Helicopter – HALs LUH and Russian KA226,
    Naval Utility Helicopter (NUH) under Strategic Partnership or HALs ALH

  2. vivek says:

    110 is very small list and most of them were just components and not fully functional devices. it wipl be much better if we can fully indigenise critical parts such as jet engine and smart bombs etc

  3. Rajesh says:

    I think there’ll be less competition among Indian companies so less innovation in the products.
    What do you think about it ?

    • No. The competition for contracts between the two def-industrial complexes, as conceived in my business model, would ensure the best tech is researched, developed and fielded.

  4. ARINDAM BORA says:

    Does the negative list also includes items that are license produced/assembled in India? For e.g., will the AK-203, Negev NG7 come under the import ban even though they are assembled/license produced in India? And when can we expect the selection of a submarine for the P75I project?
    Why are Medium Machine Gun (MMG)/GPMG & Heavy Machine Gun (HMG) not on the list?

    • Light Machine gun and the AK 203 are in the list with Dec 2021 deadline.

      • ARINDAM BORA says:

        Yes, assault rifles and Light Machine Guns are in the Dec 2021 deadline list but the AK203 deal is stuck in price negotiations. Is it possible to deliver all the 7,50,000 rifles by the end of 2021. That’s what I find confusing. Will the Joint Venture continue to supply to the forces after the due date as the product is license produced/assembled in India?

        What I was asking was, does the import ban also apply to license produced items? And what about the P75I submarines, sir? Does a ban on import of SSKs extend to all the components and assemblies that go into it?

      • Apparently not — the reason why so much of the required hardware is on the -ve list.

  5. ranjith says:

    Our main problem is the attitude of DPSUs. The timeline for AMCA induction is by 2030, which means they will probably do so in 2035/40. Do these people expect India to not face any challenges until then? How will we fight China, which seems likely within a decade? And what is this madness of manufacturing only 16-18 LCA per year? Can’t we halve the cost by manufacturing 100/year?

  6. Anoop says:

    Unbelievable that SATHI is still not with the army. I had the good fortune to see a product demonstration by Col Das so many many years ago. It was undergoing user trials then and I was told they were planning one with TEMPEST shielding. I assumed it is with the army by now. Would be a terrific help in counter insurgency operations, especially in J&K and the North east. Really sad that even a limited quantity order was not placed.

  7. Ravi says:

    Sir,what is the current status of indigenous hypersonic missile,MIRV for agni 5,agni 6 and surya ICBM missiles,k-5 missile.Is india developing any carrier killer missiles with eye on chinese aircraft carrier.

  8. divakarbhadane says:

    Sir,You have always criticize Indian DPSUs but even the Russians,Israelis,Chinese have DPSUs which are doing great business with huge exports eg-:IAI,IWI,RAFAEL,CASIC,CASC,ALMAZ,ROSCOSMOS,ROSTEC,USC.So why our DPSUs are laging behind?Do DPSUs in these countries function differently?

    • Don’t know about Russia but the DPSUs in Israel and China are all corporatized and work on the profit motive (esp true of Israeli units) and productivity is very high and the work ethos incomparably good. As re: Indian DPSUs, ask any military officer or ex- and you’ll hear horror stories about just how bad the DPSU-hardware is — in terms of just functional quality.

  9. Sankar says:

    I find the thesis presented here is an exercise based on premises that are distanced from the reality of the Indian nation. Here are some of my concerns:

    1. ” It needs the strong willed Modi government to realize this self-sustaining business model.” – How ‘strong willed’ is Modi? He is already in a depressed state unable to make a decision for the military to expel PLA from where India has terrain advantage – Despang plane (intrusion 18km). In the past (1967-8) India has given a bloody nose to PLA in Nathu La. And this is precisely the point – the ‘business model’ here must be based on the adage “the proof of the pudding is in its eating”. That implies that all the hardware components (RF waveguides, antenna structures etc) can only be validated for their performance (i.e. quality control) in the real battlefield – not otherwise in lab tests or armed forces exercises which could substantiate some positive assessment only, but will have the inherent risk of failure that the armed forces could not take.
    Furthermore, this does not take into account the fact that this government BJP could be thrown out of the office, and when a new government takes over all that “good philosophy” of self-reliance could be thrown out in the wind. Besides, in my view, there is huge corruption reigning in the private industrial sector in India in licensing and getting contracts. How could Reliance be awarded the Rafael deal without having any technical expertise in the field? They have overnight created ‘Reliance aerospace’ as I have read in the news for getting the contract.

    2. What is surely going to happen is that all such defense related business concerns will be creating their “business” managers for liaising with the military. These positions will be given to the retired higher officers of the forces – Maj Gen, Group Captains, Navy Commodores and such people. The forces will accept or reject such equipment depending on how much influence the business manager can exercise on them – it does not merit the competition of another supplier.

    3. I wonder how much Professor Karnad is oriented on the lucrative military contracting in the western world. Here the contractor will deliver the goods (with glossy reports on testing) for the customer (armed forces) meticulously adhering to the timeline etc, even if the good is a dud he knows. No official of the defense department or the forces will be in a position to reject that for fulfilling the contractual payment, since the business house would then go to the court for breach of contract. They will win the court case hands down because they can engage highly expensive lawyers arguing for them. If there is any discrepancy discovered in the performance of the product by the court, it will be referred to as the ‘faulty’ specification written in the contract drawn up and the blame will be passed on to those who wrote the specs. The consequence will be the official (state or military) will get the sack as the supplier wins the case – no one is going to risk losing his career in a such fight. This is even so pointed since there is no accountability in the Modi Raj. No one is now being blamed for the colossal failure of military and intelligence that has resulted in huge Indian sovereign territory loss in Ladakh sector.

    4. The bottom line is here money and money. Modi immediately after coming to power broke the sacrosanct rule of the state’s financial institution by demonetizing. He has now ‘destroyed’ the LIC by privatizing with “his promise” that in the market place the ordinary citizen will get a better return – who is going to believe him. He is now out and out to create the “military industrial complex” in India so that the industrial clique (Gujju?) that hoisted him to power could reap their dividend from the military sector of the public purse. The weapons whose parts will be locally manufactured will never see their day of light in the battlespace since Modi is not going to engage China (or Pak) in military conflict. They are about the show which is about minting money from the public purse.

    5. I am confident that Professor Karnad is very well informed on how the military industrial complex operates in the US. In contrast, the US fights wars but not India (under Modi rule).

    • Re: #1 Modi seems in no danger of being turfed out anytime soon. (See the Mood of the country poll in the latest issue of India Today)

      #2 All defence firms in the West, as also in India, hire retired military officers. They end up cancelling each other’s influence!

      #3 Most of the problems in mil procurement arise from loose language in contracts that leave large loopholes, and facilitate supplier Companies — Indian and foreign, taking/threatening to take MoD to the court. Tightened up contract language is not beyond the MoD, which’ll leave no legal way to not delivering what’s contracted for on time, within stated cost, especially if there are punitive penalty clauses in the contract.

      #4 In my model, — read the thumbail sketch in my post again — there’s no privatization, and that’s the beauty of it.

      #5 I am familiar with the Indian scene.

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