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India Has Struggled to Link its Defence Needs to Strategic Goals
The Wire, May 12, 2018
By Pradeep S Mehta and Abhishek
There has been a rapid change in geopolitical constellations around
the world. Citadels of free trade have turned protectionist and the
previously more-inward looking nations are now advocating for
integrated global commerce and cooperation. Disruption has become
the keyword and managing it, a challenge.
But amidst the disruptions, tectonic shifts may have already settled
where opportunities for a country like India are many. A retreating
US has given way to a new strategic phrase ‘Indo-Pacific’ with
significant implications for India. Already, a ‘Quad’ –Japan, India,
US and Australia – has come into play to co-create a future strategy
for globalisation even as China marches ahead with its grand plans.
In this churning, what is also clear is that unlike the past, the
future global map will be defined by many power centres
characterised by military might, economic strength and market
India seems to have a judicious proportion of all three and
therefore somewhere amidst this there is an opportunity for us to
address some of its most pressing concerns such as manufacturing
growth, job creation and aspiration to become a credible player in
global affairs. One way to capitalise this opportunity is by
combining India’s strategic outlook with an economic case.
This is possible at the confluence of three important elements: a
national security doctrine, a result-yielding export-oriented FDI in
defence and linking these two with the national manufacturing plan.
The problem with India is that we currently don’t have a composite
view. We lack a well-thought-out security doctrine, our FDI defence
policy has struggled to gain traction and the national manufacturing
plan lies in cold storage.
It is a well-known fact that large-scale defence manufacturing has a
high multiplier effect on jobs, innovation and industrial growth but
a major concern with regards to defence production in India relates
to predictability. There is a dire need for a predictable policy
framework to ensure that tenders are well-thought-out, defence
budgets are properly and transparently utilised, bidding processes
address strategic requirements, timelines are met and most
importantly, all this results in modernisation of armed forces in
consonance with India’s strategic interests.
So what we really need to do is to start working backwards – begin
by defining our strategic interests which must entail security and
economic dimensions within and outside our borders. A national
security doctrine would be a good point to start. It can spell out
the strategic direction that India wishes to take in the wake of
threat perceptions and the role that India sees for herself in
rapidly evolving global dynamics. This, in turn, will provide
necessary predictability about the capability that India wishes to
acquire. In other words, once we have a security doctrine, there
will be far greater clarity on operational requirements.
The good news is that the Indian government has started some hard
thinking on this front even though it has come a day too late in the
tenure of the current government. A defence planning committee has
been set up under the chairmanship of the national security adviser
to articulate strategies on national security and the capability
development plan to match that. This will inevitably require a focus
on aspects like manufacturing and foreign collaboration.
In the same spirit, another document – the draft Defence Production
Policy (DPP) 2018, has also been put out by the government. It
spells out the intent to increase indigenisation of defence
production not only for self-reliance but also for exports. In its
aim to pit India amongst the top five defence exporters by 2025, the
draft DPP talks about the integration of MSMEs and creation of
millions of jobs in the process. In concrete terms, DPP envisages
India’s defence export volume to touch Rs 35,000 crore from the
current level of around Rs 2,000 crore in next seven years but
experts feel this is possible only with the exports of complete
systems as opposed to individual parts.
In other words, what we need is a combination of an attractive FDI
policy and advance orders. India does have a policy to allow 100%
FDI on a case-to-case basis, i.e. when there is a full transfer of
technology, yet it appears that it will turn into a viable option
only when there are orders and repeat orders. In the words of Baba
Kalyani, the president of Society of Indian Defence Manufacturing,
the real problem with the defence sector is that there is no demand.
This is ironic because India is living with a vintage-era security
apparatus and we need to modernise our capability on an urgent
basis. Take for instance the Indian Air Force which is in need of
200 fighter aircraft and yet for the last few years, the situation
remains unaddressed. We have oscillated from scrapping the plan to
build the foreign fighter jets in India to cancelling to revamping
to buying off-the-shelf and to promoting our indigenous make. What’s
even more surprising is that on one day we are told that our
indigenous equipment does not meet the requirement of our forces
while on the other it is suddenly declared fit for induction.
The issue comes back to the need to have clarity for our strategic
defence needs. If we can do so, we should be able to find a
solution. Let’s not forget that India not only imports but also
exports defence equipment. Between the import and export, there is
huge latitude for India to rejuvenate its defence manufacturing
provided we get the picture right.
There are various ways to assess this latitude. India is one of the
largest importer of major arms. Its imports from 2013 to 2017
accounted for 12% of the global total and 65% of India’s defence
budget (or 1.8% of its GDP) is spent on defence imports. In absolute
terms, India currently procures defence equipment in the range of
$20 billion to $25 billion and in addition also imports components
for what it manufactures indigenously.
The other way to look at the scope is by comparing our defence spend
with China. Currently, India’s military is placed fourth after US,
Russia and China but the country sets aside three times less budget
than China on defence. Moreover, China today has emerged amongst the
largest weapons exporter from a state where it used to rely on
The message here is that if India can become a hub for defence
production, it can win many a battle already. Defence production can
provide a huge impetus to manufacturing, it can create an ecosystem
for the growth of MSME sector, it can lead to significant employment
generation, revive export-oriented growth, achieve greater
self-reliance and make Indian industry more competitive in addition
to creating positive externalities for civilian sectors by spurring
Clearly, the opportunity is knocking at India’s door but we may
again miss the point if we fail to converge economic imperatives
with security needs. Therefore, while the constitution of defence
planning committee is a great idea, it will be even better if the
commerce and MSME ministries are also on the same table.
India already has the National Manufacturing Plan of 2012, which may
be revised and revisited in order to better link it with the changed
circumstances, such as Industry 4.0 and our defence sector. The plan
already deals with the strategies for accelerating the growth of
manufacturing in India.
What’s more is that India is not alone in trying to figure out its
strategic interest. There is return of great power competition
amongst US, Russia and China. This is good news for India. India’s
geostrategic location, market size and need for modernisation is its
biggest bargaining chip with these countries in their competitive
From India’s standpoint, kick-starting large scale export-worthy
defence manufacturing in India will depend upon how deftly it works
with US, China and Russia on one hand while stitching together
internal imperatives with external ones, on the other hand.
Pradeep Mehta and Abhishek Kumar work for CUTS International, a
global public policy think and action tank.
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