Where’s the defence industry?

By Shailesh Dobhal , 05/09/2010
The Indian automobile industry is the seventh largest, and the second fastest growing in the world after China. Its auto components manufacturers are globally competitive, and every manner of automaker is already here or is in the process of setting up a base here.

Even till early 1980s, the country was an auto backwater, with just about a handful of manufacturers. The industry maturing followed, in a manner of speaking, the market. With domestic demand for anything from two-wheelers and cars to light and heavy commercial vehicles exploding in the last two decades, India has emerged as the global small car hub, and a big exporter of both finished cars and components.

In the last six years, while production doubled, from 7 million to 14 million, exports more than tripled, 0.5 million to 1.8 million last fiscal.

A big consumer market for cellphones made the world's biggest cellphone maker Nokia set up its largest manufacturing plant here, to meet the domestic requirements as well as to build an export base. The story of a big and growing domestic market spawning a vibrant domestic industry repeats itself with consistency across sectors -- apparels, consumer expendables, packaged food, pharmaceuticals, etc.

In fact, it is difficult to think of any industry sector where a huge domestic market is not a prelude to a vibrant domestic industry. Perhaps, only in God-gifted natural resources like oil, gas and minerals can a country be a big consumer and a big importer at the same time. Can there be any other such exceptions?

Well yes, if you consider the country's experience with defence equipment like submarines, ships, fighter planes and artillery guns. India is one the world's biggest consumer of defence equipment, having spent $50 billion in the last 10 years and estimates of over $100 billion in the next decade or so.

And historically we have relied on imports to fulfil over two-thirds of this requirement, as the public sector monopoly of DRDO, 8 PSUs and 39 ordnance factories have failed us squarely. Our defence exports are pathetic, even compared to other big arms importers like South Korea and Singapore. For every dollar worth of export of defence equipment, India imports $200 worth, compared to $20 for Singapore and under $9 for Korea.

Even after almost a decade of opening up of private participation and 26% foreign investment, just about 130 companies have entered the fray, and very little foreign funds have flowed in. Now the defence industry is a sensitive, highly technological one, with governments and graft never far from the scene. And you can't exactly extend the arguments of the plebeian cars and cellphones industry to as highly geo-strategic sector as defence, goes one argument.

Well, maybe not, but the logic of the market is finally inexplicable -- one who pays the piper calls the tune. True, existing big boys of the global arms club will hold back the change, and foreign governments will withhold cutting-edge technologies and newer versions for itself. But purchasing power has to be leveraged to change the old order, and a beginning has to be made somewhere.

Consider what China is doing. The authors of a paper, Leveraging Defence Offset Policy for Technology Acquisition, in the Journal of Defence Studies, January 2009, argue that China is launching its large civilian aircraft industry on an aggressive leverage of transfer of production technology from other countries in the form of outsourcing and offsets, primarily from the US and other aerospace companies.

So why can't India? The reasons are not hard to find. Our much touted defence procurement policy, which inter alia provides for an offset policy, is somewhat unclear in its objectives. The 4-year-old 'Offset Policy' requires a foreign arms vendor winning a contract of more than Rs 300 crore to offset a minimum 30% of this value in the domestic market through purchase of products/services from Indian companies or investments in setting up a joint venture with an Indian partner.

Already, in the absence of a robust monitoring mechanism, some experts have started flagging offsets as the country's next big scam in the making, with unscrupulous foreign vendors using it as a means for kickbacks.

Best practices in offset management can be gleaned from countries like Israel and South Korea that have used it to kickstart their domestic industries. Israel's offset policy explicitly emphasises acquisition of technology and not the product, for that alone can have a technology spillover effect that can spawn related ancillary industries, the backbone for all big manufacturing successes.

Ditto South Korea, where the approval of the offset contract is subject to the foreign arms vendor assuring 'approval' of technology transfer to the importing country.

Or take the example of Saudi Arabia. It realises that some cutting-edge technologies won't be shared or transferred and therefore its offset programme has evolved to harness commercially exploitable (transferred) technology, which has helped its offset-related domestic industry to already clock in billions in export sales.

Gunnar Eliasson, a professor of industrial economics at the Royal Institute of Technology, Stockholm, in his recently released book, Advanced Public Procurement as Industrial Policy, argues that there are four waves of spillovers of any technology, such as fighter aircraft manufacturing -- core, related, engineering and industrial technologies.

The value for country procuring high technology-led armaments is how its organises its industrial systems' absorptive capacity to leverages on such spillovers that can have long-term economic benefits in terms of spawning related industries, dual-usage commercial technologies.

Our offsets system, which has become virtually a government dictait-led windfall for big and small domestic players alike, should instead strive to create a defence industrial ecosystem of technology absorption, assimilation and innovation.
Source:Financial Express
Where’s the defence industry?

Vijay Diwas: PM to launch indigenously-built nuclear submarine on July 26

Hyderabad: The Eastern Naval Command at Visakhapatnam is gearing up for a unique milestone in India's defence history on July 26 wherein Prime Minister Manmohan Singh will launch the indigenously-built nuclear-powered submarine that is tentatively named 'INS Arihant'.

July 26 is celebrated as 'Vijay Diwas' which marks India's triumph over Pakistani intruders in Kargil. Launch of the indigenously-built nuclear-powered submarine has been planned for July 26 to coincide with Vijay Diwas. A host of Navy and defence officials are expected to grace the occasion.

Though the Navy authorities haven't yet officially confirmed the programme, Andhra Pradesh Chief Minister Y. S. Rajasekhara Reddy announced the Prime Minister's visit to Visakhapatnam after a meeting with the latter in New Delhi late last week. A senior Navy official told PTI over phone from Visakhapatnam that everything related to the event was being taken care of by Navy higher officials in New Delhi.

"Right now we have no information about the event as such," the Navy official added. Said to be built under the Advanced Technology Vessels (ATV) Programme at a cost of 2.9 billion USD at the Naval Dockyard in Visakha patnam, the 6,000-tonne submarine will be put on sea trials for two years before being commissioned into full service. In the two years, the submarine will also undergo harbour trials of its nuclear reactor and other systems.
Source: PTI
PM to launch indigenously-built nuclear submarine on July 26

India ready for war? Forces grapple with delays, red tape

20 Jan 2009, 0602 hrs IST, Rajat Pandit, TNN

NEW DELHI: For all its aspirations about becoming a superpower, India continues to fumble in formulating strategic plans to systematically build the country's military "capabilities" in tune with its geopolitical objectives.

For one, the government is yet to finalise the 11th Defence Plan (2007-2012) due to wrangling between the finance and defence ministries. For another, similar is the fate of the much-touted LTIPP-2007-2022 (long-term integrated perspective plan) till now, say sources.

"Successive governments have failed to formulate budgetary plans with a concrete strategic underpinning," said a top official. India does spend a lot on arms deals but it happens in a haphazard manner, without clear prioritisation, and is dogged by huge delays.

India's defence expenditure, of course, has also fallen below 2% of its GDP for the first time in decades this fiscal despite military experts demanding at least 3%. Even as UPA government now belatedly fast-tracks procurement of military hardware and software in wake of 26/11, here's a look at some of the gaps in military capabilities:

Nuclear Deterrence: India has Agni missiles as well as fighters to deliver nukes but no nuclear-powered submarines armed with nuclear-tipped missiles. The "nuclear triad" is still some four years away from completion, with the 25-year-old indigenous programme to build nuclear subs under the ATV (advanced technology vessel) project yet to come to fruition.

Submarines: To China's 57 attack submarines and submarine-launched ballistic missiles, India has just 16 aging diesel-electric submarines, with huge serviceability problems. Only half of Navy's 10 Russian Kilo-class, four German HDW and two virtually-obsolete Foxtrot submarines are operationally available. The Rs 18,798-crore Scorpene project will deliver six submarines only between 2012 and 2017. Pakistan, meanwhile, is building its submarine arm, inducting three French Agosta-90B vessels.

Fighters: Airpower may be decisive during wars but IAF continues to grapple with a free-fall in its fighter squadrons, down to 32 from its sanctioned strength of 39.5. Though 44 squadrons are needed to meet "a full conflict" with Pakistan, while maintaining "a dissuasive posture" against China, IAF will reach the 39.5 mark only by 2017. Delays in both the indigenous Tejas Light Combat Aircraft as well as the procurement process for 126 new multi-role combat fighters in the $10.4 billion project has led to this situation.

Artillery: The Bofors ghost has derailed Army's artillery modernisation plan, valued to be well over Rs 15,000 crore. There has been no induction of big guns since the 1986 procurement of 410 Bofors 155mm/39-calibre howitzers. Army wants to induct 400 155mm/52-calibre towed guns, with another 1,100 of them to be manufactured indigenously, in a Rs 8,000-crore project; 180 wheeled self-propelled howitzers for around Rs 4,700 crore; 140 air-mobile ultra-light howitzers for around Rs 2,900 crore.

Night-Fighting: Army, in particular, requires a strong dose of third-generation thermal imaging sights and night-vision devices. It wants to equip all its tanks, which include 1,200 T-72 tanks, with solid NF capabilities by around 2010-2011.

Aircraft Carriers: Navy has long demanded three carriers but it does not have even one operating at present since the ageing 28,000-tonne INS Viraat is currently undergoing another life-extension refit to ensure it can run for five more years.
India ready for war? Forces grapple with delays, red tape

Lehron ke Sartaj: National Geographic Channel showcases Indian Navy premiering 02 Feb 2009 at 9PM

Express Features First Published : 27 Jan 2009 NATIONAL Geographic Channel will showcase the uncharted world of the Indian Navy, replete with warships, submarines, missiles and much more. Premiering February 2, Monday nights at 9 pm, Nat Geo's Mission Navy: Lehron Ke Sartaj is all set to take viewers on a fascinating journey inside the Indian Navy.

The series will have seven visually stunning episodes which give an insight into the lives of the brave men who patrol and protect the country. With this initiative, Nat Geo provided five civilians including three women, the unique opportunity to be a part of the Navy, training and imbuing them with the courage, grit and determination synonymous with the Indian Navy.

With over 50,000 entries from across India, only fifteen semi-finalists were selected after a series of physical and mental tests conducted by the Navy. The semi-finalists then underwent grueling selection tests in Mumbai to reach the final five, including 23-year old Arjun R Shetty from Bengaluru; 21-year old Sudhanshu Budakoty from Mysore; 20-year old Sakshi Havanoor from Pune; 28-year old Chaitanya Datla and 25-year old Suranjani H R from Bengaluru.

They will be a part of the Indian Navy for over a month. After basic training, they set foot for the first time on a Naval vessel. Some of them not only got to learn the science behind submarines, but also a chance to train in one. They were also trained in beaching operations and the difficult jack stay amongst other tasks.

At the end of the series, the most resilient, deserving and valiant of these five finalists will have the honour of sailing with the Indian Navy's Lehron Ke Sartaj on an international tour.

The decision by the Indian Navy would be based on various exercises, tests and experiences the participants went through during the month long training period. Presented by Samsung Mobile and powered by Idea, the series is being extensively promoted on-air, on-ground, on-line and through print, outdoor, radio and SMS campaign.

Lehron ke Sartaj
Navy joins hands with Nat Geo to open its world for people
NGC to premiere 'Mission Navy' on 2 February