Defence R&D: What India needs to do

The defence R&D and defence production model that India had adopted, did not encourage the participation of private industry, while the government sector came up short of expectations.

In 2008, the Defence Research and Development Organisation celebrated its golden jubilee. Since its inception in 1958, the DRDO has achieved some spectacular successes. It also has many signal failures that are a blemish on its name. The successes include the Integrated Guided Missile Development Programme that produced the Prithvi and Agni series of ballistic missiles and, subsequently, the BrahMos supersonic cruise missile in a collaborative venture with the Russians.

Among the major failures are the Main Battle Tank Arjun that has not met some critical general staff requirements of the Indian Army despite time and cost overruns and the Light Combat Aircraft that still appears to be light years away from operational induction into the Indian Air Force. However, to DRDO's credit, it worked under extremely restrictive technology denial regimes and with a rather low indigenous technology base.

Consequently, the policy of self reliance did not yield substantial gains as India continued to import almost 70 per cent of its defence equipment for over four decades, primarily from the Soviet Union and, later, Russia. And, if some MiG-21 aircraft and other weapons systems were produced in India, these were manufactured under license and no technology was ever transferred to India, with the result that even though India spent large sums of money on defence imports, the technology base remained where it was.

At present the DRDO is in the process of deliberating upon and implementing the report of the P Rama Rao Committee report that asked DRDO to identify eight to 10 critical areas which best fit its existing human resource, technical capability and established capacity to take up new projects.

Will India's plans for defence modernisation lead to a substantive upgradation of India's defence technology base and manufacturing prowess, or will the country's defence procurement remain mired in disadvantageous buyer-seller, patron-client relationships?

India is likely to spend over $50 billion (about Rs 250,000 crore) on defence acquisitions over the next five years. Among the weapons systems and equipment to be acquired, the big ticket items will include the aircraft carrier INS Vikramaditya (the Admiral Gorshkov), 126 multi-mission, medium-range combat aircraft, six C-130J Hercules transport aircraft for the Special Forces, eight maritime patrol, surveillance and reconnaissance aircraft -- possibly the Boeing 737 P-8I, six Scorpene submarines, and a large number of main battle tanks, 155mm towed and self-propelled artillery howitzers, plus equipment for counter-insurgency operations.

One of the major spin-offs of the Indo-US nuclear agreement is that it has sounded the death knell of the era of defence technology apartheid practiced against India by the US and many of its partners in the West. It will still be a decade or more before the ghosts of technology denial regimes are finally buried. The deeply entrenched bureaucracies in the departments of state, defence and commerce in Washington will take quite some time to they finally accept India as a co-equal partner with whom dual-use technologies can be shared to mutual advantage. US MNCs, which have always taken their bearings from their government's foreign policy leanings, will surely lead the charge and make a beeline for India.

Meanwhile, India too has some growing up of its own to do as the country sheds its suspicions of the past and gradually moves away from the rather overzealous chanting of the mantra of self-reliance towards joint ventures.

While the government continues to retain its monopoly on defence research and development, it is slowly moving away from relying primarily on the public sector for defence production. The revised Defence Procurement Procedure 2008, announced recently, continues to emphasise public-private partnerships and encourages the private sector to enter into defence production -- either on its own or through joint ventures with multi-national defence corporations, which may bring in up to 26 per cent FDI.

Large-scale procurements of weapons and equipment from defence MNCs has been linked with 30 to 50 per cent 'offsets', that is, the company winning the order must procure 30 to 50 per cent components used in the system within India.

This will bring in much needed investment and will result in the major infusion of technology -- even if it is mostly low-end rather than high-tech to begin with. However, the DPP is still a policy that is evolving and has many shortcomings that need to be overcome. For example, the MNCs do not find 26 per cent FDI exciting enough. There is really no credible reason why equity investment cannot be raised to 49 per cent for a JV to be really meaningful for a foreign investor.

As a growing economic powerhouse that also enjoys considerable buyers' clout in the defence market, India should no longer be satisfied with buyer-seller, patron-client relationships in its future defence procurement planning. In all major acquisitions in future, India should insist on joint development, joint testing and trials, joint production, joint marketing and joint product improvement over the life cycle of the equipment.

The US and other countries with advanced technologies will surely ask what India can bring to the table to demand participation as a co-equal partner. Besides capital and a production capacity that is becoming increasingly more sophisticated, India has its huge software pool to offer.

Today software already comprises over 50 per cent of the total cost of a modern defence system. In the years ahead, this is expected to go up to almost 70 per cent as software costs increase and hardware production costs decline due to improvements in manufacturing processes. If a new weapons development project needs 500 software engineers, where else but in India can such a high quality work force be found?

However, India cannot leap-frog to a higher plane virtually overnight. The immediate requirement is to think big in keeping with the country's growing international status and to plan for the future with a level of confidence that policy planners have not dared to do before.

Perhaps a showpiece joint project with the US will lead to the unshackling of India's real potential. A candidate project for such a venture would be the joint development of a theatre ballistic missile defence system that is a key priority for the US and will also benefit India's nuclear deterrence. It will take the trajectory of Indo-US relations to a much higher orbit.