Foreign control of cyber space, Prime Minister Narendra Modi warned in his Independence Day address, “can be a threat to the social fabric of our country, our economy and can even threaten the development of our nation; we are very well-aware of that. India is very cautious and is planning to take steps to combat these risks.” This was not the first time he had talked about cyberspace and the need for the country to be self-sufficient in related technologies, and to harness its potential for accelerated development and for better governance. While the message may have got across to the people, it apparently has not to the officials manning the government.
A day earlier on August 14, Niti Ayog chairman Amitabh Kant, who is regarded by many insiders as the PM’s favourite babu barring his Personal Private Secretary PK Mishra, unveiled the ‘Aspirational Districts Programme’ (ADP) for digital connectivity that Modi has touted as the vehicle for faster all-round rural progress. So, what’s the problem? Bypassing the normal tendering process, Niti Ayog picked Oracle Corporation of California to provide the cloud-based database management system and software driving this programme. Why is that important? Because it kept the relevant technology competent Indian companies out of the game, preventing them from competing for a contract that, should the programme be extended nation-wide, will be worth thousands of crores of rupees. Were there competition, an Indian company would likely have won, giving a fillip to, and registering the government’s vote of confidence in, indigenous technology development. It would have put teeth in Modi’s plan for an ‘atm nirbhar Bharat’ (self-reliant India). Instead, the ADP is controversial, labelled by a former official, as “another scam, another excuse” to award a big tech company contract when schemes — e-seva portal, common service centres, etc. — already exist to do the same job as Oracle is commissioned to do. “None of these bureaucrats or Big Tech companies will actually go down to ground level to solve real problems” this official said. “They will just fete each other in airconditioned rooms and make nice presentations.”
Had Niti Ayog taken the indigenous route on ADP, other ministries would perforce have taken note because the Department of Telecommunications (DoT) notionally responsible for ADP is, perhaps, the most egregious among government agencies in resisting and rejecting indigenous technology. The public sector BSNL signed a contract with Huawei for advancing its 4G network despite clear injunctions from the government not to do so. But then it was taking its cue from its parent — DoT, which had top listed the Chinese Huawei Company in the 5G sweepstakes despite national security concerns. It resiled from its position only after the Swadeshi Jagran Manch approached the Prime Minister. But to prove the point that generalist civil servants are never wrongfooted, the secretary responsible for pushing Huawei was, after retirement, appointed to head an ‘expert’ committee deciding on non-Huawei choices. Predictably, the Committee is inclining towards Nokia of Finland and Ericsson of Sweden as alternative suppliers when various Indian companies have already developed different technology components of an even more advanced telecommunications system, such as photonic transmission, but are missing a single entity to integrate these various technologies into a single 5G+/6G system designed and engineered for India by Indians!
Or, take the fibre-optic project connecting Chennai with the Andaman and Nicobar island chain. National security was offered as the reason by external affairs minister S Jaishankar to not only shift the contract from the lowest bidder, Huawei, to the Japanese company NEC, but got the Universal Service Obligation Fund (USOF), to finance it. USOF is a little known, separately administered unit within DoT tasked with funding rural telephony and indigenous networks, and known mostly for being, according to a source, “wholly corrupt”. “My question is” writes Smita Purshottam, ex-Indian Foreign Service, who retired as ambassador to Switzerland, “why no such grounds were invoked for domestic ICT networks?” Purshottam is founder and head of SITARA (Science, Indigenous Technology and Advanced Research Accelerator), an organization campaigning for home grown technology in government contracts and having as its members some of the smartest high-tech Indian companies and startups. In a note dated August 15 to SITARA members, she also pointed out how Jaishankar’s own ministry, MEA, has been remiss on the self-reliance front, not giving “any contracts under telecom Lines of Credit (LOCs) to domestic companies”, adding tartly, “I fail to see how a group dedicated to promoting domestic upgradation can get excited about LOCs benefitting only foreign companies [especially when] resources are scarce and the imperative of domestic development [of technology] is greater.”
And that’s the trouble. The current BJP government may be Modi-centered and top-driven. But Modi cannot be everywhere, monitoring everything. Hence, government agencies and departments, rather than being motivated by the principle of self-reliance (which would have led, for instance, to DoT forging a consortium of Indian private sector firms as 5G+/6G technology integrator), and the MEA offering telecom LOCs to Indian firms, they seek excuses and loopholes to continue importing goods and technologies, manifesting the characteristic Indian craze for “phoren”. It makes nonsense of the Prime Minister’s call for atm-nirbharta. All these instances suggest the PM and the rest of the government are not really on the same page, that Modi decrees something be done in a certain way beneficial to the nation only to have the bureaucrats habituated to doing things another way, carrying on as they have always done.
Modi’s self-reliance policy to a considerable extent pivots on the success of medium, small, and micro enterprises (MSMEs). I have long advocated the need for the government to incentivize in every way possible the emergence of MSMEs as the Indian version of the German ‘mittelstand’ – a concept France has replicated, as the source of technological innovation in the country. Except, other than lip service the government has done little to encourage and ensure the MSMEs their ease of doing business. Horror stories abound of would-be startups in the MSME sector, after getting initial clearances, having their projects, capital and other resources held up by rapacious, rent and bribe-seeking politicians, police and petty functionaries. Again, it shows a disconnect this time between what Delhi intends and how entrepreneurs and MSMEs are hobbled at the local level where Modi’s writ doesn’t run.
There, however, is light at the end of the tunnel where military hardware is concerned. I have long maintained that the government should go ‘cold turkey’ on arms imports and simply ban purchases of all armaments. Throwing the Indian defence industry thus into deep water, I argued, is the only way to force it to learn to swim. It is good the Modi government accepted the advice in principle. On August 9, Defence Minister Rajnath Singh released a list of some 101 defence items, each with its own timeline, beyond which their import is banned. It will beneficially shake up the scene. Sixty-nine of these items have a very short time window and cannot be purchased abroad after December this year. In this section are featured major high value systems, including ship-borne cruise missiles, towed 155mm artillery, tactical simulators for various combat arms, missile destroyers, anti-submarine warfare ships, light combat aircraft, light combat helicopters, specialized kinds of shells and ammunition, radars, assault and long range sniper rifles, conventional submarines, electronic warfare systems, self-propelled barges, drones, and machine guns.
This list may appear ambitious but between the private sector and DPSUs almost all these items are already being produced in the country. The more important and welcome aspect of the new procurement policy is that the escape route for the armed services to import these items by rejecting the indigenous versions as quality-wise deficient is closed. Meaning, the forces and the relevant combat arms will have to become stakeholders in the indigenous programmes and work with the manufacturers to, if required, improve the product.
The fly in the ointment is the possibility that the government will succumb to pressure mounted by the labour unions in defence public sector units (DPSUs) to hand over the main manufacturing contracts to them, with private sector firms thrown crumbs as subcontractors. This would be a fiasco. The track record of DPSUs over the last six decades in terms of product quality, and delivery within time and cost constraints is so abysmal, to appoint them principal contractors would, for the Modi government, be like taking an axe to its self-reliance policy.
Alternatively, it would make sense, for instance, to assign the Indian Navy’s Project 75i diesel submarine production to Larsen & Toubro – the only private sector company with the production wherewithal and its invaluable role and experience in building nuclear powered submarines, and compare its performance with that of the public sector Mazgaon Docks Ltd, which has struggled with producing the Scorpene submarine – delivering the first unit 12 years late and at almost twice or more of the stipulated cost.
The government will have to begin to trust the profit-driven private sector which cannot afford to waste time or resources nor to violate contract terms or alienate customers by rolling out sub-standard products as DPSUs routinely do. The IAF, for example, has often had to induct into service new HAL-built Jaguar low-level strike aircraft with leaky fuel lines because the Service has no choice. The Indian government should ensure private sector companies a major role hereafter and force the DPSUs to compete with them. Competition may, in fact, improve DPSUs’ product quality and delivery schedules.
There is an urgent and large IAF requirement for the Tejas Mk-1A. Even with two assembly lines, HAL cannot produce more than 18 LCAs annually. Getting DRDO-HAL to share source codes for this aircraft with Mahindra Aerospace and other companies with capability to, at a minimum, have as many as four Tejas production lines outputting some 72 aircraft a year, will enable a whole big aviation industrial ecosphere to spring up of small and big firms designing and producing components, systems, subsystems and ancillaries, employing people in thousands with positive cascading effects on the economy. Mahindra have already been selected by Boeing to manufacture the F/A-18 E/F Super Hornet carrier aircraft in the hope the Indian Navy will buy it. What is problematic is the Super Hornet’s conforming with the Rajnath Singh list featuring the LCA, whose navalised variant not too long ago passed the carrier landing and takeoff test and may be ready for induction in the same time frame as Mahindra can get up the India-made F-18. In any case, multiple LCA production lines will result in decreasing unit cost, increasing profits from export orders, and internally generated funds being available for the development of the follow-on indigenous advanced medium combat aircraft.
LCA then can be in the van of the Modi government’s ‘atma nirbharta’ defence policy, and help it to take wing. Should Modi and Rajnath Singh follow it, they will be remembered for birthing a multi-faceted, world-class Indian defence industry and for generally seeding a high value, high technology sector that will assist India to pull itself up by its bootstraps.
A shortened version published in my Realpolitik column in BloombergQuint.com, August 24, 2020, at https://www.bloombergquint.com/opinion/how-to-get-atmanirbhar-in-defence-production