Monday, January 31, 2011

Indian Defence Production Policy: Got the policy, where’s the plan?

Submarine hull sections being readied at Mazagon Dock Ltd, Mumbai.

Comment by Deba R Mohanty, Senior Fellow at the Observer Research Foundation

Sometime during the last DefExpo, held in New Delhi in February 2010, RK Singh, the Secretary of the Department of Defence Production, had announced that the Indian government would soon come out with a defence production policy, a commitment successively pronounced by the defence minister and defence ministry mandarins in various public forums. Most members of Indian defence and security affairs (including from industry chambers CII, Ficci, Assocham, etc.) have been suggesting that the government come out with a ‘roadmap for Indian defence industry’, and the defence minister’s unveiling of the first Defence Production Policy (DPrP) on 13 January 2011 – the first ever written policy document on critical national security issues – has come as a welcome development. 

Now that DPrP is in effect, it is time to make a preliminary assessment on its objectives and possible consequences. First, DPrP’s main objective is “to achieve substantive self-reliance in the design, development and production of systems required for defence forces”. Second, it “aims to create conditions conducive for the private industry to play an active role in defence production”. Third, it gives importance to “harnessing the untapped potential of the small and medium enterprises in the indigenisation process”. Fourth, the policy will actively encourage “involvement of academia, R&D institutions, technical and scientific organisations”. Fifth, the policy will encourage “formation of consortia, joint ventures and public-private partnerships to synergise and enhance national competence in defence production”. Last but not the least, the policy suggests the government “set up a separate fund to provide necessary resources to production stakeholders like the public and private industry, SMEs and academic/scientific institutions for research and development efforts”. In sum, DPrP strives to achieve a reasonable degree of self-reliance in defence by enlarging the scope of industrial and R&D institutional participation beyond DRDO and defence public sector units to include private industry, SMEs, scientific research institutions and relevant academia. 

Now that the DPrP is in place, let the objectives of this important policy be pitted against ground reality to find out whether the latter has influenced the formulation of the former, and if so, to what extent, and if not, how autistic is the problem in the current context. Such an exercise will hopefully enable the government to consider further revision, if any.

First, conceptually, self-reliance in defence, a contested term with different subjective meanings yet generally understood as ‘attainment of a certain degree of strategic autonomy by a country in design, development and production of military goods and services’, has moved from an autarkic model (state-controlled) to embrace openness through diversification and collaboration for the past few decades. DPrP has tried to follow the same pattern but fails to chart a definitive plan of action, which requires, ab initio, a technology roadmap and identification of products, services and R&D that can be pursued by the defence industry. Unfortunately, while such a roadmap was indeed prepared by the Integrated Defence Staff and put it in the official Website some time ago, the same has been withdrawn now! A carefully prepared holistic roadmap for the industry is a necessary pre-condition for a meaningful DPrP. 

Second, the DPrP, instead of charting out clear roles for categories of stakeholders, has actually concocted the structural aspects of defence production. For example, while the role of SMEs has been emphasised without explaining how, it has surprisingly left out Raksha Udyog Ratnas (RURs), considered to be the future locomotive of the Indian defence industrial base! The role of academia and R&D institutions have been mentioned but how will they be involved in the structure have not been spelled out. Similarly, neither the philosophy nor the methods of creating collaborative models like public-private partnerships, joint ventures or consortia have been explained. More deliberations are required to look into structural aspects of the policy. 

Third, DPrP rightly recognises that the development of complex systems is generally a stage process and thus allows some flexibility of ‘buy’ option. This is a delicate issue. Often times, as DRDO has demonstrated in many of its flagship programmes in the past, critical development projects are based on unrealistic time frames, frequent quality requirement (QR) changes, bureaucratic and political apathy, resource crunch and problems in technology acquisition. DPrP must spell out a practical strategy to ensure long-term complex projects reach their eventual conclusions. 

Fourth, DPrP envisages a separate fund for R&D efforts by industry and academic and scientific institutions. It actually means that DRDO will have its own fund while another fund will be created for the industry. Such funding efforts, unless carefully synchronised and synergised, are likely to lead to duplication of efforts rather than any healthy competition. DPrP should find a viable option on funding. Fifth, DPrP, like the Defence Procurement Procedure, has failed to give a workable solution to the problem of transfer of technology (ToT). Most ToT agreements in defence have thus far ended with licence production arrangements, thus giving little benefit to the production agencies. Last but not the least, the defence minister’s annual review of progress in self-reliance in defence efforts will end as a ritual unless a common minimum quantification of self-reliance efforts is arrived at. Else, we will be perpetually confused as to how self-reliant we are in defence production.

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