Editor’s Note
However much we indegenise, if there be a critical component that is there on an otherwise Indian platform, it renders us vulnerable to sanctions invoked on the country providing us the component. As such, design and development are critical ingredients of self-reliance. However, a substantial inadequacy remains funding for R&D. The article examines the issues and attempts to find a way out of the swamp that we may find ourselves in.
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Two unrelated developments in the last week of October, 2024 underscored the need to revisit the current approach to making India self-reliant in defence production, mainly by promoting local manufacturing of defence equipment and maximising the Indigenous Content (IC) therein.
On 28 October, Prime Minister Narendra Modi and his Spanish counterpart Pedro Sanchez inaugurated the TATA-Airbus aircraft complex in Vadodara. It is the first aircraft manufacturing facility to come up in the private sector, from where Tata Advanced Systems Limited will start rolling out C-295 medium tactical transport aircraft in a couple of years from now to replace the aged Avro fleet of the Indian Air Force.
Within two days of this, on 30 October, the US imposed sanctions on nearly 400 entities and individuals the world over, including 19 Indian companies and two citizens. This punitive action was taken against these entities under the Countering America’s Adverdsaries Through Sanctions Act, 2017 for aiding Russia in its war with Ukraine by supplying ‘dual use’ technologies to the former.
These two seemingly unconnected developments expose a chink in the Indian defence industry’s armour. While local manufacturing has indeed expanded, it is also dependent on import of critical components and, as the second development demonstrates, imports by the manufacturing agencies in India are potentially vulnerable to sanctions, however remote the possibility may be.
This vulnerability is illustrated by the C-295 project itself. The aircraft is going to be manufactured in India and its IC is expected to be around 90-95 per cent, but the avionics and engines will have to be imported. These are critical components without which the aircraft cannot fly. A similar situation obtains in respect of many other platforms.
The Light Combat Aircraft (LCA), Su-30 MKI fighter jets, and Hawk Trainer aircraft, all of which are powered by imported engines, according to some old reports, have IC of 82, 68 and 71 per cent respectively. Some of the major equipment and weapon systems used by other services are also similarly import-dependant.
Though the companies affected by the US sanctions have been nonchalant and New Delhi’s reaction has been muted as its acquisition programmes are not hampered by these sanctions, sanctions can have larger ramifications.
Imagine the consequences if even one of the sanctioned entities was manufacturing some equipment for the armed forces using a few critical components imported from the US. In the circumstances, the US action was as much about political messaging as enfeebling Moscow’s resolve and ability to continue the Ukraine offensive. It would be naïve to gloss over the message.
In 2019, the then Trump Administration had warned India that its decision to buy the long-range S-400 missile defence system from Russia will have serious implications on defence ties. Though in 2022, after prolonged suspense, the US House waived CAATSA sanctions against India for purchasing the missile system from Russia, the possibility of manufacturing programmes undertaken by the Indian companies being affected by sanctions by the US and its NATO allies cannot be dismissed as improbable.
Self-reliance must, therefore, be defined as the ability of the Indian industry to manufacture sophisticated futuristic equipment without depending on import of the most critical components or technologies required for local production. In this scheme of things, the percentage of IC in the product, though important, would not be the focus of self-reliance, which is presently the case.
This is not to argue against the merits of collaboration between Indian and the foreign companies for manufacturing defence equipment in India with transfer of technology from the latter, but to suggest that the policy on self-reliance must factor in the possibility of foreign governmental actions disrupting technology transfer.
One way of preventing this is by including a suitable clause in the contracts. The standard Force Majeure clause does indeed contain a sub-clause to the effect that the acts of the seller’s government or any of its agencies which may affect the discharge of the contractual obligations shall not be treated as Force Majeure. While this sub-clause does empower the MoD to impose penalties in case of any contractual default, it cannot prevent disruption in technology transfer if push comes to shove.
The prospects of such disruption are minimal only when the foreign technologies, that go into defence production, are available from multiple sources across the world, or when alternative technologies can be developed in a crisis without any adverse impact on operational preparedness, and the contract provides for integration of such technologies with the equipment being made in India in collaboration with a foreign vendor. However, these options are not always practical.
All this points to the inevitability of prioritising indigenous design and development (D&D) of critical technologies. Within this broad parameter, the focus must be on acquiring the capability to develop the technologies which are susceptible to sanctions, denial regimes, exorbitant costs, and geopolitical compromises. In other words, the focus has to shift from acquisition to D&D as the pathway to genuine self-reliance.
The prime responsibility for D&D of critical technologies and platforms is shouldered by the Defence Research and Development Organisation (DRDO) which, rather than being enabled to produce the intended results, has been the subject of severe criticism -often unwarranted- from all quarters, including the MoD, of which it is an integral part.
In less than two decades, two committees -Dr Kelkar Committee in 2005 and Raghavan Committee in 2023- have recommended DRDO’s restructuring and revamping but it has made no perceptible difference to the outcome, which is characterised by several successes, such as in the field of missile technology, and many let-downs, as in the case of engine technology.
Looking back at the last 20-30 years, the problems besetting DRDO can be categorised as institutional/structural, procedural and budgetary, but the focus of the ‘reforms’ has been only on the first of the three problems. Even so, DRDO continues to be a governmental think-tank dedicated to defence R&D, a planning body for R&D projects, and an executive agency to boot. These roles need to be separated.
In the US, which is the global leader in defence innovation and research, the responsibility of developing emerging military technologies is discharged by Defense Advanced Research Projects Agency (DARPA). It has just about 220 government employees -DRDO has more than 26,000- spread over six technical offices, including nearly 100 program managers. This small complement of professionals oversee about 250 R&D projects, with most of the work being outsourced to the private R&D agencies.
Incidentally, in 2005, Kelkar Committee had recommended setting up of a Board of Research for Advanced Defence Sciences (BRADS) to function on the lines of DARPA, but the government did not accept the recommendation. Consequently, the self-reliance mission lacks cohesion, with the Department of Defence Production, Acquisition Wing in the Department of Defence, Department of Military Affairs, and individual Services making disjointed efforts towards the same goal.
The procedural cumbersomeness is as critical as the organisational factor. The procedures followed by the DRDO are oriented towards acquisition with D&D being incidental to it. The DRDO Procurement Manual is more about the financial aspects of contracting than about execution of developmental projects and removing roadblocks which are bound to surface in every such project.
Lastly, the financial resources available for developmental projects are simply not enough. The proportion of R&D budget to the total defence budget has come down from 6.38% in 2018-19 to 5.1% in 2023-24. As a proportion of the GDP also, the R&D budget has come down from a meagre 0.088% in 2017-18 to 0.078% in 2023-24. Considering that a sizeable proportion of the budget goes into payment of salaries and other revenue expenditure, the actual sums available are not enough to propel a major self-reliance push.
To sum up, self-reliance in defence production must be viewed as the capability to design, develop and productionise critical technologies without which the equipment cannot be operationally exploited. This will require setting up of an overarching organisation to shortlist and plan critical projects, developing flexible procedures for execution of developmental projects, figuring out how to make it attractive for the private sector to invest in such projects and coordinating all developmental efforts by professionally qualified programme managers.
Amit Cowsish
