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

1. monitor the progress at regular intervals
2. participate in inevitable trade-offs between conflictual requirements
3. make-buy decisions
4. trials at sub-system stage
5. authorise release of funds based on accomplishment of milestones, etc

• 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