Supporting domestic defence industry CENJOWS 04 Nov 19
https://cenjows.gov.in/article-detail?id=222
Supporting domestic defence industry CENJOWS 04 Nov 19
India is the world’s second largest importer of military weapons, after Saudi Arabia. It imports from a multitude of nations, including the US, Russia, France and Israel. The basic reason is that Indian defence industry has suffered from investment in R and D and in building a manufacturing base. For decades, considering defence a holy cow, successive governments, possibly due to diverse reasons prevented the growth of the domestic arms industry. Further, the DRDO also acted as a roadblock towards the involvement of the private sector, seeking to maintain a monopoly.
The Army Chief, General Bipin Rawat, speaking at the Colonel Pyara Lal memorial lecture last week, mentioned, ‘The basic problem (in indigenization of defence manufacturing) is of investment in R and D. Is the industry today capable or willing to invest in R&D without assured orders? How do we then give assured orders to the industry when you have to bank on a three-tier system of looking at who is the lowest bidder as well as seeing who has better technology. Do we give preference to technology or to cost?’
He added, ‘The issue is, do we have the capacity to absorb technologies. There are countries around the world which are willing to transfer their technology to us. But where is the base to imbibe this technology? Therefore, the industry has to focus to a greater extent on R and D.’
Make in India is slowly taking root. As present defence manufacturing in India is restricted to mainly assembly or production with some level of transfer of technology. The new artillery guns under induction are either locally assembled (K-9 Vajra) or developed and manufactured based on earlier Transfer of Technology (Dhanush). The AK 203 rifles shortly being manufactured at the OFB plant at Amethi will be based on transfer of technology from Russia. Bullet proof jackets under induction are locally developed.
Navy modernization, including its under construction aircraft carrier, is largely localised with Indian shipyards taking a large pie, however mainly in collaboration in technology with foreign companies. The Tejas, though manufactured locally has an almost 60% imported component.
The government has begun encouraging domestic industry by two parallel approaches. In the first, they are funding research by the private sector and in the second they are encouraging them to conduct research at their own cost. Unless technology levels develop internally, the nation will continue to have to bank on imports as also lack the ability to absorb technology transfers.
It was in this context that the vice chief of the army, Lt General MM Naravane stated in an address aimed at the Indian defence industry, ‘I would like to give this commitment and assurance on my part that whatever you produce, we will take. Let it be Mk1 (the first version), the improvements will continue and there will be a Mk II and a Mk III.’
While encouraging domestic defence industry continues, albeit at a snail’s pace, import of equipment and hardware would not stop. Development of domestic defence industry can only happen if support for investment in R and D is provided by the government and the industry is assured of procurement of their products even if they are initially lower in technology than the open market.
Simultaneously, there is a need to restudy the existing procedures and consider improving on them to enhance quality of equipment being procured as also reduce time involved between projection of requirement and induction.
Defence procurements have always been under the scanner due to accusations of kickbacks and rigging in the selection process. Political parties and vested interests, have on occasions, dictated the equipment and in the bargain, collected kickbacks on deals. The involvement of retired Lt General Tejinder Singh in the sub-standard Tatra vehicles case and Air Chief Marshall SP Tyagi in the AgustaWestland scam indicates that apart from those in the procurement chain, military personnel too have been involved in rigging the procurement process.
Governments have over the years attempted to streamline procurement procedures and ensure that there are minimum stumbling blocks, but adverse incidents have blocked such attempts. The Defence Procurement Procedure (DPP) for capital procurement was laid down in 2016 and regularly amended, including till Apr this year. It had been crafted with the aim of ‘improving efficiency of the procurement process, usher change in the mind-sets of the stake holders and promote growth of the domestic defence industry.’
The system has multiple stumbling blocks and hence takes prolonged time between the projection of a requirement to the placement of orders and final induction. The Rafale took over a decade for induction, artillery induction was inordinately delayed due to claims of kickbacks and even essentials like bullet proof jackets took a long time.
The major thrust in the DPP, same as for all other government contracts, is the adoption of the L1 or the lowest bidder who meets the basic terms and conditions as laid down in the Qualitative Requirements drafted by the concerned service and approved by the government.
However, the system of the L1 vendor may not be considered ideal for every piece of equipment being purchased. It may be valid when the equipment is a major purchase as an aircraft or artillery gun. For equipment, especially if it is a domestic development project, similar rules should not apply.
It was with this backdrop that the army chief had made his comment that in case we need to encourage domestic industry, we need to ignore the L1 rule. The Vice Chief had also supported the same when he mentioned procurement of local technology equipment, if locally manufactured.
The thrust from the army has been to enhance the Indian defence industry and reduce dependency on imports. As India rises in the global stage, it needs a robust internal defence industry. This can only happen if the industry is supported by investing in R and D and purchasing locally manufactured equipment provided it meets requirements of basic quality and reliability. For this, it is essential to amend the L1 rule.
About the Author
Maj Gen Harsha Kakkar
Retired Major General Indian Army