Self Reliance in Defence Production

What is the issue?

The Defence Production Policy (DProP) 2018 has set ambitious goals for 2025.
There is a need for some fine tunings in defence industry to achieve the goal of self reliance.

What does the policy provide for?

It includes provisions for boosting production, exports, and investment.
It would, thereby, create two-three million jobs domestically.
It also aims to achieve global leadership in artificial intelligence and cyberspace technology.
To drive this policy, the government has identified 13 product categories.
It has permitted 74% FDI in “niche” technologies.
It plans to develop two defence production corridors.
It also plans to constitute private sector units and to establish defence innovation hubs.
Given all these, there are some misconceptions as to the strategies adopted for self-reliance in defence manufacturing.

Why is the FDI route less likely to work?

There is a mistaken belief that production companies decide on transfer of technology.
But it is the governments, not manufacturers that decide technology transfer.
It is based on political and military considerations, geopolitical factors and long term business commitments.
It is also believed that foreign manufacturers would be attracted by the mega Indian market for their products.
However, certain cutting-edge technologies are closely guarded.
Foreign companies will not part with them under any circumstances.
Also, no government can assure the foreign companies that orders will continue to be placed for all time to come.
Clearly, the FDI route is no salvation for self-reliance in defence production.

What is the challenge?

Military needs reliable combat/combat support systems to counter threats.
Technology of the equipment should match, or preferably be better than, the technology of the adversaries.
The military expects product support, trainers and simulators.
It also requires mid-life upgrades during the equipment life cycle which typically will be about 20 years.
Importantly, research, design and development and manufacture are closely coupled.
However, in reality, domestic industry lacks the capability, domain knowledge, skill, expertise and experience or capacity.
It includes adequate trained manpower, specialised test facilities, test ranges, etc.

What could be done?

DRDO - Industry could be the lead agency for development of new products.
However, it may sub-contract development of certain sub-systems to a DRDO laboratory.
The industry’s managerial expertise and DRDO’s technical expertise could be coupled for optimum results.
Funding - Presently, the MoD funds the DRDO for development of new products.
It results in minimal interaction between the armed forces and the developer.
Instead, the armed forces should fund these developments from their own budgets.
This would be an essential structural change which would give them a sense of “ownership”.
It will give the armed forces an incentive to

It would also minimise time and cost overruns and shortfall in specifications.
The armed forces would need to develop project monitoring skills.
Manufacturing ecosystem - The manufacturing industry is organised into a three/four tiered structure.
Tier one companies are “integrators”.
The whole chain forms an “ecosystem” which the DProP 2018 recognises.
However, it is industry which can create and nurture such ecosystems, not the government.
To assure long term loyalty and commitment, tier one companies have to necessarily support MSMEs initially.
The defence production sector would need about 20 tier one companies and several lower tier companies.
All these in conjunction can make the DProP 2018 a successful one towards self reliance in defence production.

Source: BusinessLine