Monday, 10 August 2020

Defence Manufacturing: Window to USD 5 Trillion Economy

By Akshay Kumar
Updated: February 12, 2020 11:35 am

It must smite the conscience of all Indians is the fact that we a regional power and a major global player are the largest importer of arms .  It not only engenders massive out-flow of precious foreign reserves  but more precariously   leaves the country vulnerable to manipulation by the arms manufactures, which are confined to five or six countries, an occurrence we witnessed during the Kargil war. During the Cold War, the problem was less accentuated because India had the facility to source arms from the Soviet Union  by making payments in the Indian currency. However, post  Cold War  this facility died, thus increasing our strategic vulnerability due to lack of strategic maneuver space.

In fact, since the Cold War ended, the West led by the United States became unopposed in the world pecking order and therefore, our critical needs in the arms became subject to exploitation by the military-industrial complex dominated by US and its partners. Therefore, with the changing security dynamics and geo-political paradigm, self-sufficiency in arms is not only imperative for USD 5 Trillion economy the country has envisaged in the near future, but more importantly, it is an inescapable requirement for our strategic autonomy. In fact, the time is ripe because since the demise of the Cold War, never has the geopolitical environment been so advantageous for us. The emergence of China & the congruency of strategic interests, with the US, Japan, Taiwan, South Korea & Australia has compelled the formulation or coinage of new strategic terms i.e. Indo-Pacific region. Now that the Americans have decided to place 60% of their war waging assets in the Asia Pacific region, the term Indo-Pacific implies that India is not only confined to the Indian Ocean but beyond into the South China Sea as well. Under the present circumstances, if India is expected to play a meaningful role in the Indo Pacific region and pose  strategic challenge to China at the regional level, we must have the appropriate diplomatic and defense muscle. We must not forget that defence and diplomacy are two sides of the same coin, thus, the strategic partners of India have vested interest in India becoming self-sufficient in arms production, which can only happen if we have a robust indigenous manufacturing capability.

 

Why did we lag behind?

Post- Industrial revolution India was colonized & fought wars on behalf of the British masters, wherein it had absolutely no role in matters of strategy, high defence planning or arms manufacturing. The country was impoverished by the British and poverty led to Indian men being used as cannon fodder in massive numbers in WWI & WWII. In fact, In WW II alone a humongous army of 2.5 million was mobilized on a voluntary basis and subsequently demobilized soon after the war without any compensation or even remorse. Though the country had relatively excellent defence manufacturing infrastructure by way of ordnance factories and the Hindustan Aeronautical Limited, the country suffered on account of indigenous arms manufacturing capability due to lack of arms manufacture culture and resources. Truth be told, our Industrial production was focused entirely on utility items and did not cater to fulfilling our strategic needs, for which the blame lies squarely at the feet of our decision-makers  who did not have the vision nor the will to develop India as a potent military force in the world. Even though, some feeble attempts were made to achieve indigenization post-independence, most of the steps were of cosmetic nature. For instances, the first Indian PM Nehru tried to develop an indigenous fighter aircraft and even appointed the famous aircraft designer Kurt Tank to make the dream a reality, but later  the initiative was wasted,, and  the  program collapsed. As a matter of fact, India also began to produce its own military vehicles at Jabalpur, but due to various reasons the initiatives had minimal impact towards our drive towards indigenization.

 

Mission Mode vs Bureaucratic Mode

In whatever sector we went in a mission mode, we achieved astounding success. This clearly demonstrates the level of our capability. For example, when the Atomic Energy Commission was set-up under Dr. Homi J Bhabha, it was not placed under any ministry but came directly under PM. The result is for all to see. In those days the Atomic Energy Commission was a paperless organization and without any bureaucratic interruption, meddling or interface. It’s a well-known fact that by late 50’s Bhabha  had claimed the capability to test a nuclear bomb. Had that happened the Indo-China war of 1962 would have been deterred. Dr. Bhabha died under mysterious circumstances when his aircraft crashed in 1966 and our program received a temporary setback. Despite that, we overcame the hurdle and continued our quest for a Nuclear bomb in mission mode and today India is one of the leading powers in the nuclear technology, the same can also be said about our space technology prowess. Our space technology  also faced numerous and murderous hiccups created  by western powers. These powers planted a false spy story on the Indian Space Research Organisation (ISRO) to technologically decapitate the famous scientist, Mr Nambinaryan and in-turn ISRO. In missile technology as well we have made impressive strides because of the project being in a mission mode. Therefore, we exactly know what ails the Indian arms industry. The solution is very much available within us as demonstrated by our experience in Nuclear and Missile technology. There is no compulsion  to look beyond.

The Beginning of change

The present dispensation has acutely realized the need for the creation of pan  India ecosystem & infrastructure  for manufacture of arms & equipment. While addressing the concern it

has highlighted or made the bid for investment and technology in this sector. Investment ,technology and  technical manpower are the most daunting challenges. It has drawn  from experience of countries which have created  industrial clusters for promotion and facilitation of defence industries. Towards this it has spelt out its proposal for creating SEZs, National Investment Zones and Industrial corridors. These industrial clusters are important for the purpose of performance, advantage, economy of scale, proximity to specialized ventures, reduced transportation cost & integrated networks. An example of such an industrial cluster is Marseille in Southern France, which specializes in the manufacturing of aircraft parts and helicopter designs. It provides employment to a large number of locals & also has facilities for Aerospace simulators and training centers. Similarly, there is Lumut & Manjung cluster in Malaysia. This cluster has attracted over 200 plus maritime industries and also encompasses a naval academy & research center. In our case, these clusters/ SEZ/ NINZ need appropriate infrastructure and tax- breaks for overcoming the birth pangs by indigenous arms industries.  It must be realized that modern fighting platforms are multi-disciplinary in nature. No single manufacturer can cater to all domains; hence they need to intimately collaborate with various other manufacturers for production, maintenance, and economies of scale. Therefore, there is a pressing imperative of co-locating them.

 

Arms Manufacture Policy

The Indian establishment has announced different approaches for creation of arms procurement and industry   i.e. Make in India, Buy Indian (IDDM—Indigenously Designed, Developed and Manufactured), Buy and Make (Indian). The motivation is clear—we do not want to be hostage to Buy( Global). We are also seeking strategic partnerships with global OEM (Original Equipment Manufacturer) to seek technology transfer to set up domestic infrastructure. It is also continuously refining its policy on off-set obligations. Considering that the big-ticket acquisitions in the pipeline for the Indian armed forces, there is a huge opportunity for make in India by the global players.

 

Challenges

No country in the world has the capability to design and manufacture every and all kinds of arms and equipment’s. So for Make in India the biggest challenge lies in garnishing technology and skill as well as creation of Infrastructure. Electronics and metallurgy are two major areas to be addressed. This can only happen if there is partnership between the industry and the academia. We need to nurture talent with a specific focus on defense mechatronics (Mechanical and electronic engineering) as the current supply of technical manpower is only from PSU’s and the defence services. The biggest challenge is that the SEZ/NINZ and industrial corridors need to meet the expectation of the industry in terms of faster clearances, tax benefits, businesses incentives  liberal economic policies,  adequate power/water supply, linking of SEZ t through supply chain, which necessiates essentials such as roads , railways, airports, telephone  lines etc.

 

Economic Corridors

India has announced five industrial corridors. These corridors will be dotted with smart cities & will be part of the larger economic corridors. The 1043Km Delhi- Mumbai economic corridor is being constructed at a cost of USD 90 billion, which will link the Indian political capital with the financial capital. There will be nine mega industrial zones in the corridors with each zone consisting of 200-250 Sq. Km linked by high-speed freight line, six airports, six-lane expressways, a 4000 MW power plant, industrial hubs and clusters.

 

Defence Corridors

The government is setting up two defence corridors, the Chennai- Bengaluru corridor, which is routed : Chennai – Hosur – Coimbatore – Saler –Tiruchy. The second one is the Bundelkhand corridor, which is divided between Uttar Pradesh and  Madhya Pradesh, which is likely to generate Rs. 2 Lakh 50 thousand crores worth of revenue.

 

Conclusion

No late entrant into the arms industry can excel in every segment. Israel realized this and decided not  to fritter  time and resources on manufacturing platforms. It excels in electronics & other add-ons, which makes the weapon system  agile and robust. Similarly, we should not dissipate our energy and resources on the manufacturing of platforms. Rather, our focus should be on  developing technologies  that have a dual application. This will also help us utilize our scarce resources optimally. In this regard we have already made beginning,. The Ministry of Defence has awarded USD 2 million to a scientist Ajay M Wiener to develop carbon nitride nanomaterial. This nanomaterial captures carbon dioxide from the atmosphere more efficiently than the available systems. Finally, we must ensure that our arms production projects are in the mission mode rather than the bureaucratic mode. We indeed have the capability .Dhanush artillery guns, Pinaka MBRL, BrahMos,  Arjun MBT, Dhruv helicopters, Tejas LCA , nuclear submarine INS Arihant and Off Shore Patrol vessels Navy vindicate. India has now embarked on construction of its indigenous aircraft carrier INS Vikrant-I.

 

By Akshay Kumar

(The author is former defence journalist and Head of Content for India’s biggest fintech company)

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