Intro: In addition to forging joint ventures with foreign companies in domestic defence production, India needs to strengthen domestic Research and Development in defence.
The union government has, quite commendably, listed policy points for attracting Foreign Direct Investment (FDI) in defence production in India. But, certain more important aspects of the matter need to be considered in the context of the ‘Make in India’ campaign portal of the government so that viability of investment from the point of view of foreign companies could be worked out and brought out more clearly.
The first and the foremost point is India’s low cost of manufacturing caused by globally one of the lowest costs of labour—skilled, unskilled and professionally qualified. This obviously translates into a globally competitive cost of production that makes Indian products cheaper in the world market. But no foreign investor in India’s defence production sector would like to lose existing global customers of its products to the new defence manufacturer-exporter entities in India. This consideration may make the foreign companies to bring outdated and outmoded technologies in India, which we need to be beware of. India has already suffered heavily in the past on account of procurement of such equipment. An example is the huge import of MIG fighter aircraft from Russia. We are all privy to the episodes of crashing of numerous MIG aircrafts and the accompanying loss of Indian Air Force (IAF) pilots, not to talk of the exorbitant cost of spares for which India had to pay through the nose.
India actually needs to strengthen its domestic Research and Development (R&D) in defence by optimal utilisation of the in house research capabilities of Defence Research and Development Organi-sation (DRDO). In fact, this indigenous R&D agency needs to be expanded and reinforced, even while forging joint ventures with foreign companies in domestic defence production. In fact, India’s past achievements in pursuit of self reliance in defence technology are not insignificant. The GNAT aircraft which outmanoeuvred the United States made Sabre jets during the Indo-Pak war of 1971, the Arjun tank and the missile series comprising Brahmos-Prithvi-Agni are good achievements. We really need to encourage and get more out of our talented scientists engaged in defence research and development.
Collaboration in defence production in India will also be influenced by international political equations and issues of geopolitical balance of power. Hence, we need to shift focus gradually from technology import to capital import. In fact, huge capital investments in defence production in India would not be easy to come by because of various complex geo-political reasons as aforesaid. Hence, India needs to tap its financial resources in a big way to establish large defence production facilities within the country. Retrieval of corrupt money stashed in India and abroad is going to be an important source of capital for this purpose. Another mode of capital generation could be issuance of tax free defence bonds. When talking of raising capital, one cannot but point out the huge shortfall in fiscal revenue generation in the country. According to rough estimates, the income tax collection in the country still hovers around 25 to 30 percent of the realisable tax revenue. In USA, the corresponding figure exceeds 90 percent. It is no open secret that most of the small and lower end businesspersons do not pay any income tax.
The importance of indigenous R&D in domestic defence production cannot be overemphasised. By now, the competence and capabilities of Indian scientists are well known. They have achieved remarkable results, evidenced by the success in developing light combat stealth aircraft and the missiles. But our R&D achievements are far below our actual potential, as in all other fields.
The answer to the question of performance gaps in R&D is crisp and clear. Professionalise the R&D bodies in the country. Let the R&D personnel be paid salaries and remuneration by global standards. Remove the rotten bureaucratic culture in DRDO and other government organisations that doesn’t adequately reward performance but does reward sycophancy. Extend greater autonomy to this prime organisation called DRDO. Our young engineers and scientists should prefer to work in DRDO rather than the R&D centres of US arms manufacturers.
With dependence on imports for 60 percent of our defence equipment requirements, indigenisation of defence production is a must if India is to develop into an economic and political superpower. For this, self reliance, whether in marshalling capital resources or in technology or in actual manufacturing, holds the key. (The writer is a senior columnist)