The Indian defence sector is no longer just poised for a leap; in fact, it’s well into the leap to attain next level of technology-based competence, quality and cost-based competitiveness. We are witnessing a transformation that is directed by new policies incorporating timelines for implementation. Defence Secretary, Dr Ajay Kumar has been leading the Ministry of Defence through this momentous transition. In an interview given to Nitin Gokhale, Editor–in–Chief, Bharatshakti.in, Dr Kumar spoken eloquently on a wide range of issues pertaining to the transformation, the sector is witnessing currently.
Nitin Gokhale: Atmanirbharta (self-reliance) has been the key mantra for the Government for the last 4/5 years now, but it has got accelerated since 2020. Where are we now and what’s your assessment?
Defence Secretary: In the life cycle of any sector there comes a time when it is on a take-off stage. And, if we look at our defence industry eco-system, we are truly at a take-off stage. When we started initially, and for years now, we have been trying to promote a lot of domestic manufacturing in defence. And, I would say that we have achieved certain progress in that. Today, our domestic production is around Rs. 85-90,000 crores. But, one of the lacunas of our current model has been that most of this production has been based on Licensed Technology (ToT). And this is a big handicap because the control really remains with the country which is giving you the technology.
We are now evolving to the next level of Atmanirbharta, and in real sense the true Atmanirbharta where we are saying that the defence products and equipment that we make are not only going to be manufactured in India, but be based on design and technology which has been designed and developed in India. And once we are able to do this, I think we would have achieved what we call true self-reliance.
Nitin Gokhale: That will aid exports and will also give India the leverage it wants and we become truly independent in terms of Defence platforms and products.
Defence Secretary: Absolutely correct and rightly said. Today, when you are on Licensed Production, you have constraints on exports, you have constraints on how many units you can produce, and you have constraints on upgrading that technology to the next higher level. Therefore, you are tied down to what was offered to you and you really can’t move up the value chain, whereas when you will have your own technologies, you are not handicapped. If one component is not available. I can tweak the system and buy something else. We are also aided by one very important factor in this regard and that is – the technical profile of defence equipment is changing. We are now looking at non-kinetic warfare. Even in kinetic warfare, we are looking at unmanned platforms. And in each of these domains, the role of digital technology is predominant. And if you look at India, this is an area of our strength.
Today, as you are aware, how our start-ups are erupting in terms of new technology, unicorns every day; raining, literally. As the world is moving towards technology-based defence platforms, we have an opportunity to leapfrog in this effort of design and development, and leverage the strength of the country as a whole, whether it’s industry, academia or existing public sector institutions, or start-ups. If this capability exists and the country has a lot of capability as far as innovation is concerned, I think India is a country where innovation is ingrained in the psyche of people, because their survival is at stake. After all, you have to compete for every small thing and therefore, the moment we transform this effort of design and development into getting this country involved, I think that we will see tremendous pace of growth of defence technology.
Nitin Gokhale: So, as a corollary, two things have happened. As I have mentioned and you’ll be able to confirm it – one, is that we are progressively reducing dependence on imports. Secondly, we are bringing in more and more MSMEs and start-ups into the ecosystem, giving them opportunities that they thought never existed. So, in that context what are the plans, what are we doing at the moment?
Defence Secretary: Actually, we are involving all the stakeholders now. But the amount of vibrancy and energy that is there in the MSMEs and start-ups is actually quite thrilling. We have seen the start-ups under the iDEX programme. They are developing technologies which would take years (8-10 years), in 18-24 months. Technologies which could take hundreds of crores of rupees, now getting developed in 10 crores and out of which the government. assistance is Rs1.5 crore (in IDEX, the max assistance is Rs. 1.5 crores). And, the number of problems which can we can solve at the same time, we are giving hundreds of problem statements, simultaneously. So, we are now using the scale of our start-ups to be able to produce new technologies at a faster pace.
I must say that day before yesterday, 22 March, was a historic day. Within 24 months of date of articulation of a problem by the Armed Forces (Army, Navy and Air Force), 14 problems had been stated, technological solutions had been produced, tested and have been given a procurement order/approval for procurement. This is unheard of, unprecedented/unthinkable insofar as defence is concerned. In two years, we are talking of from problem to induction. I think, this is where the real change is happening in the defence technology; is making a huge difference.
Nitin Gokhale: iDEX has been in existence for about four years now. It has clearly shown the results that were results that you wanted, and the recent decision to do Make 1, Make 2, some of the combat platforms, what kind of response you are expecting?
Defence Secretary: In this year’s budget, as you know, the government has taken a huge leap of faith, in terms of stating that we are opening up Defence R&D. In 2001, the government said we are opening up defence manufacturing, defence production, and defence production was opened up for private industry. In 2022, the government said we are opening up Defence R&D. And this has led to this opportunity or using the strength of industry, academia, Start-Ups, anyone else who is capable of doing such things and to kick start that process.
We had the budget webinars which were held under the guidance of Hon’ble Prime Minister and some suggestions came during that budget webinars. From those suggestions, we consulted with the services, DRDO, with all the stakeholders and we have shortlisted 18 platforms (major), which will be game-changers, e.g., there are a lot of unmanned platforms which are the requirement of future. There are directed energy weapons that are future technologies. There are lightweight tanks which the Army wants. The industry says we can do it. So, 18 major platforms have been identified. Some of them are under Make 1, some under Make 2, and some under the SPV model. And we are now going to be taking further steps and see how the progress is and the more important thing is to be able to get everyone who has interest in developing these come together and take it forward as a team.
Nitin Gokhale: And the change in mindsets, I think that is the basic change that one sees in the approach to private industry and the PSUs. Everyone is energized. You also recently visited some PSU shipyards. They have become very competitive. The way I see and the way they are doing, multiple innovative things. Your views?
Defence Secretary: I recently visited Goa Shipyard (GSL). I was very impressed by two things. One was they have developed Autonomous Interceptor Craft vessels. Without any orders from any of the forces, invested their own money and developed it and today it is available. It is a beautiful autonomous vessel. They took me around on it. They had one of the top leadership of Norway visit them. And when they took them on this vessel, they couldn’t believe it. As you know, Norway is outsourcing a lot of shipbuilding to India, to Cochin shipyard and other shipyards. One of the ships which they have outsourced is an autonomous ship. But the technology was coming from them. Here, the technology is in-house. This is the leapfrog in technology that we are seeing happening.
This is a great example for the other PSUs to emulate and follow GSL Goa. Create your own products. Now what has happened is that GSL is flooded with orders from police, oil companies, Navy and Army wants it for their operations. The second thing which you’ve mentioned is that they have become very competitive. What GSL has done very effectively is standardisation, something on which we need more stress. They developed their own design first. They focused on OPVs offshore patrol vessels. They designed and then standardized the design of OPV. GSL is churning out OPVs in months now, less than a year. And the cost has come down. No one is able to compete with them at that kind of cost because everything is standardized. Design, material, vendors etc., all are standardized. Their cost as of today has come down to 30-40 per cent of the cost he was quoting earlier.
Standardization is a great thing which they have done. Standardisation is the key. Standardization for various platforms and various equipment producing companies. So, we are now making an effort of talking to Quality Control of India, to work out a model as to how we can standardize some of our platforms, particularly which are relevant for shipyards and also for the other platforms, wherever applicable. That is going to be very important.
Nitin Gokhale: In this context, it’s so heartening to know that because of the changing geopolitical context. Look at the last 20-30 years, we’ve been so dependent on Russia, Ukraine, and Central Asian Republics giving us some critical equipment. With the Russia-Ukraine conflict going on, do you think that this is another booster for Indian industry? Indian designers, to look at how we can reduce imports, may be even do spare parts for Russian origin equipment?
Defence Secretary: We have an excellent relationship with Russia and Ukraine, and we see that our relationship will continue to be good. We also have an excellent relationship with the USA and France. But our Make in India/ Atmanirbharta programme is independent of these good relationships and actually precedes even this war and much beyond. I mean, these things will come and go, but our determination and efforts to be able to create our own defence technologies will go on relentlessly. In these last two years, of all the AoNs last year, more than 85 per cent were for Make in India. This year again the number would be something around that. And now we have absolutely made it clear, and the services are making earnest efforts to see, wherever there is an indigenous solution available, they would prefer the indigenous solution as against any imported solution. That is the change in mindset. Also, IDDM has helped a lot.
Nitin Gokhale: Like you’ve mentioned, disruptions will come and go. The foreign OEMs have this feeling somehow that we are not going to encourage them to give their equipment or look at foreign technology. I want you to give that clarification.
Defence Secretary: We have liberalized our FDI policy. That is a clear indication that we encourage and invite foreign OEMs (original equipment manufacturers) to come and Make in India. We have created a new category for foreign OEMs to make in India so that we can buy especially those technologies which are not designed and developed in India. And we have made efforts to and, in the past also, Defence industry corridors will provide incentives for them to set up their shop. So, our effort today, if you want to participate in the Indian market, come make in India, don’t only look for the Indian market because then you’ll say that you don’t have enough scale. Look at the larger export and if you’re looking to set up an MRO shop don’t look at the number of P-8i we have, look at the number of P8s this region has (the world has). I have a feeling that more and more OEMs are willing to accept this position and are coming forward and that is why our FDI has shown growth we’re very happy to welcome any foreign OEM coming into the field, especially in areas where we lag. In today’s world, we are not saying that we will have every single technology, in the supply chain. As long as we are not logged in to anyone, we’re happy to purchase things that are available off the shelf, are economical.
Nitin Gokhale: Coming to the Indian industry, while all these great changes have happened, policy implementation etc., not enough consistent orders are coming to them. Is that what you’re also getting to hear?
Defence Secretary: We are trying to increase the number of orders, we are making efforts to consciously push in that direction. One is that we have started earmarking the budget for domestic industry. Within the budget, we have started earmarking 25 per cent for private industry and a significant chunk of money for Start-Ups. This is a signal for the industry to come and take more orders. I think it’s improving slowly. We would be happier if more orders can be given to private industry. We are discouraging, as far as possible, nomination-based orders to PSUs. We want everything to be given on competition (level playing field).
A major decision taken by the Hon’ble Raksha Mantri (Defence Minister) during the last DAC is also in favour of industry. We have reduced the Bank Guarantee load on the industry. Because, in the industry, every penny counts and in the defence sector contracts can go on for 8-10 years. If he has to carry his bank guarantee for 8-10 years, that much is lost which the PSU did not have to pay. So, there was a differential. We have taken that off now. We are continuously trying to bring industry to par wherever possible, make them compete and participate, easier for them to compete and participate. Contract for C 295 is a good signal and it is the biggest order to the private industry I’m very confident that the industry will prove up to the expectations and deliver as per the requirement of the project.
Nitin Gokhale: I also wanted to check on the programme of Digitisation. You’ve taken so many initiatives on digitization, of records, of processes. What is the standard you want people to achieve?
Defence Secretary: If you look at MoD (Ministry of Defence), I often say we have a large number of functions replicated, and it happens in the rest of the government and defence also. But unfortunately, those associated with defence, somehow there was some reluctance and some concerns regarding digitization. People were worried about whether digitization will lead to security leaks. The fact of the matter is the world over defence organisations, ministries are using digital technology in a very, very big way. There are multiple ways of ensuring that what we do is secure. If there is a great amount of security to be ensured, we can create an air gap. So, we have started in areas that are especially non-sensitive or non-super sensitive. We have said that in order to manage this whole governance of defence, we need to digitize. Whether its digitisation of records. We are the biggest landholders. But the management of land records was, maybe, not at its best. We manage canteens for 30 lakh users. Today, we have an e-commerce facility and the convenience of the users is tremendously enhanced. We have 35 lakh pensioners. Today, in the world, we have the most advanced pension disbursement and administration system.
Where people used to take six months for getting their pensions, the average time has been reduced to 16 days. In very many cases, in one day the pension has been sanctioned. What was happening earlier is when the bank gave the pension we were not aware of what the different items were. Today, like the salary slip I get, every pensioner gets a salary slip. So much is your Basic, DA, whatever special allowance, Disability. So you know what is being deducted.
Similarly for family pension, so many pensions will get converted to Family Pension over a period of time. Because we are recording the details and Aadhar of the legal inheritor, just with the death certificate of the pensioner online, and the bank account of the individual authorized the Family Pension, the pension can start. The idea basically is to manage the massive system of the Ministry of Defence’s large population of human resources.
Digitisation will enhance the quality of the utilization of resources and give better service. It will lead to greater efficiency and will result in better management of resources.