Defence industry woes: beyond the blame game

The real issue is competition (and the lack thereof)

It is unfortunate that those making arguments for positive change feel compelled to blame participants of the status quo for all that is wrong with it. The most famous example of this—and its unfortunate consequences—is the India-US nuclear deal. The prime minister’s office under Manmohan Singh sought to justify the need for this deal by casting doubts on the record and the capabilities of India’s nuclear scientific establishment. Not only did it create resentment in a constituency whose co-operation is vital for the success of the deal. It didn’t play too well with the public either, as people were more likely to trust India’s scientists on the topic than its politicians and spin doctors.

Now Bharat Varma, a respected analyst and editor of the Indian Defence Review, disses DRDO in an article in which he makes a very important point: the need for greater competition in the defence industry. Blaming DRDO for ‘failing the Indian military’, though, was unnecessary and will draw undue attention to the less relevant part of his article. There is little doubt that DRDO’s performance could have been better. But holding DRDO responsible for failing the armed forces is like holding Hindustan Motors responsible for India’s lacklustre car industry during the license permit raj. The real fault lies elsewhere. Given the right incentives, sleepy state-owned behemoths can reveal surprising agility. [Related Post: A player who is also a referee]

Capt Varma’s offers good suggestions as to how these incentives might be changed. One word: competition. It is fair to say that India has the industrial capacity to support the most exacting needs of the armed forces. What has really failed the Indian armed forces is the government’s failure to harness the vitality of the private sector and combine it with the achievements of DRDO and the wider public-sector scientific establishment. [Related Posts: Liberalise the defence industry; On government husbandry]

Public awareness of military and security issues is relatively shallow. The interest of reformers would be better served if the public debate generates more light than heat. Given the gravity of the issues involved, a slugfest that places the armed forces and DRDO in opposing camps is wholly unnecessary. You are now bound to see DRDO’s supporters respond to Capt Varma’s article by pointing out how the armed forces prefer foreign hardware. And the debate can get passionate.

It is more important to target the Indian government, the political class, and the scandal-happy media for a concert of ineptitude, political point-scoring and sensationalism that is responsible for the armed forces not getting the most bang for the taxpayer’s buck.

Liberalise the defence industry

And thank Russia for shaking India out of its lazy old ways

What stands in the way of the Indian armed forces using indigenously developed main battle tanks, fighter aircraft and aircraft carriers?

Answer: Cheap Russian imports.

Years of dependence on Russian military hardware—which could be obtained at rather attractive prices—simply meant that the armed forces preferred readymade products they could use, rather than take more risky route of using the gear that the Defence Research and Development Organisation (DRDO) was developing. Giving the armed forces roughly what they wanted was a less risky option for the politicians heading the defence ministry. The relative ease with which Russian arms could be imported meant that there was no real incentive for India’s policymakers to think how domestic defence production could be improved. This is an oversimplification, of course, but it is the nub of the issue.

India needs a crisis, it is said, to jolt it out of its ways. Russia’s behaviour over the refitting and delivery of the aircraft carrier should provide one. Not merely because it upsets the navy’s plans to have two carrier groups by the end of this decade, but because the possibility of a Russia-China equation is real. India should develop a reputation for standing up to Russian armtwisting. Reliance on imports from Russia—cheap or otherwise—, however, poses long-term strategic risks.

Now, building main battle tanks, fighter aircraft and aircraft carriers is not trivial. But there is no reason to believe that India can’t develop and build them indigenously. It’s time to liberalise the defence industry. Transforming defence procurement policies to ensure that there are strong domestic manufacturers is not rocket science. It can be done.