India’s DefExpo 2018 – miles to go

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India’s 10th Defense Expo, with the motto “India: The emerging defense manufacturing hub,” last week saw delegations from 47 countries and more than 670 companies, including 154 foreign manufacturers participating. The novelty was that the four-day event was held for the first time in Chennai, in the home state of Defense Minister Nirmala Sitharaman, Tamil Nadu.

Erstwhile defense minister A K Antony established many defense-industrial units in his home state of Kerala despite disadvantages of distances, transportation, raw materials etc. Another defense minister, Manohar Parrikar, shifted DefExpo to his home state of Goa, despite dedicated infrastructure in New Delhi, where maximum military personnel (actual users) could attend and where DefExpo was held eight consecutive times.

Ironically, political ambitions overtake everything else; establishing defense manufacturing units and holding DefExpo in one’s home state generates employment, boosts the hotel industry, helps create mammoth infrastructure and accelerates tourism – all contributing to the vote bank. Perhaps a future defense minister from Arunachal Pradesh will hold DefExpo in his home state, setting China’s tail afire.

DefExpo 2018 had an India Pavilion with displays by the government’s Defense Research and Development Organization (DRDO), Defense Public Sector Undertakings (DPSUs) and indigenous private defense manufacturers. They all had participated in previous DefExpos, albeit showcasing products in separate pavilions or stalls.

While inaugurating the DefExpo, Prime Minister Narendra Modi said the government would give a boost to defense manufacturing by expediting the process of license procurement, drafting simpler rules on foreign direct investment (FDI), and creating two defense corridors. This has been government’s intent from past four years but without much progress.

An addition to this was a proposal to establish two defense corridors by Finance Minister Arun Jaitley while announcing the latest federal budget. The first corridor will link Chennai with Bangalore, passing through Coimbatore and several other industrial clusters. The second corridor that is planned will be in the Bundelkhand region of Uttar Pradesh, which will also link Agra, Allahabad, Lucknow, Kanpur, Jhansi and Chitrakoot.

Much talk, little headway

The talk of boosting private-sector participation in defense manufacturing has been going on for more than a decade and a half, but has made little headway. Similarly, proposals for liberalizing FDI in defense and streamlining the Defense Procurement Policy have been publicized annually for the past several years, but with few results. FDI in defense from 2014 to the end of 2017 was a measly 11.2 million rupees (US$170,400). Despite Modi’s personal push for a “Make in India” policy since 2014, the project is floundering, the culprits for which are within India’s Ministry of Defense (MoD).

In a much-publicized ceremony presided over by Sitharaman at DefExpo 2018, eight DRDO technologies were “transferred” to the public and private sectors. This was needless self-aggrandizement because transfer of these technologies had already taken place in 2012 in separate ceremonies.

The DRDO may have fooled the defense minister but not the foreign participants very much, who are abreast of developments in the Indian defense sector. As someone tweeted, if there is nothing new to show, falling back on old stuff is the only recourse.

In a move termed “unprecedented,” India called in its 44 defense attachés posted abroad for “specialized briefings” to boost defense exports and explore new markets. This was perhaps a bureaucratic brainwave to impress the defense minister while hiding the fact that before proceeding on a posting, every defense attaché visits DRDO and DPSU establishments, and that defense exports are a part of these people’s responsibility.

The problem in pushing defense exports is the quality of indigenous products and the time schedule of delivery. Would the defense minister know that in the past when South Korea showed interest in purchasing 12 indigenous bridge-laying tanks, India’s response was delivering two per year – which country would wait for six years? It would be better to brief foreign defense attachés posted in New Delhi on what defense equipment India can export, the possible delivery time schedule, practical handling and live demos as applicable. Besides, how about giving priority to making up critical deficiencies of India’s own military?

The two defense corridors will obviously boost the DPSUs, but how much will they permit the participation of the private sector, including small and medium-sized enterprises and startups. is anybody’s guess.

The Dhirendra Singh Committee recommended the “Strategic Partnership Model” (SPM) for creating capacity in the private sector on aa long-term basis over and above the capacity and infrastructure that exists in the DPSUs. It had no role for the DRDO (which should focus on research and development); however, the DRDO has entered SPM through the back door, hindering “Make in India.” This is because of the MoD-DRDO nexus and attenuated corruption, while the military is made to pay three times the price for items, just one example being the combat dress.

No government has the will to privatize the white-elephant Ordnance Factories, fearing not only worker unions but also the “parallel government” of mafias that rule India. It is because of these mafias that India is without a national security strategy and the government lacks the guts to reorganize the defunct higher defense set-up, including the MoD, which functions without military professionals.

On the contrary, a bureaucrat in the MoD who leaked military secrets to the media and orchestrated the closure of the army’s Technical Support Division during the Congress-led United Progressive Alliance II is back in the MoD at a higher level under the Bharatiya Janata Party-led National Democratic Alliance II.

According to the World Bank, India can innovate like Silicon Valley, provided it can expand its innovation ecosystem. As for defense, unless production and research (barring a few sensitive technologies) move out to private sector, India’s potential as a defense manufacturing hub will remain stymied. At present, there is no will toward that.

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