The mirage of self-reliance - Broadsword by Ajai Shukla - Strategy. Economics. Stuff.

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Thursday, 3 June 2021

The mirage of self-reliance

In the absence of robust technological and project management structures, MoD’s indigenisation drive will remain questionable

 

By Ajai Shukla

Business Standard, 4th June 21

 

Under Defence Minister Rajnath Singh, the Ministry of Defence (MoD) has upped its game impressively in the field of press announcements. There are regular bulletins on the defence minister’s inauguration of assorted web portals and visits to his office by assorted Bharatiya Janata Party (BJP) office-holders. Amongst the subjects that often feature in MoD press releases is “Atmanirbhar Bharat” (Self-reliant India). Ironically, this phrase was first coined in Prime Minister (PM) Narendra Modi’s broadcast to a locked down country on May 12, 2020, when India was grappling with the dual challenges of Chinese troop intrusions into Ladakh and the mass migration of millions fleeing the Covid-19 pandemic. Yet, like his cabinet contemporaries, Mr Singh understands he must generate credit for the PM by regularly invoking his signature schemes.

 

“Atmanirbhar Bharat” featured prominently in the MoD’s announcement on Monday of the second “Positive Indigenisation List” of 108 items of defence equipment. Added to the first Positive Indigenisation List of 101 items that the MoD promulgated last August, there are now 209 defence items that must be compulsorily procured from Indian companies, the number rising each year out to 2025. At the start of this year, 69 items (mentioned in the first list last August) were embargoed for import. At the end of this year, another 60 items will come under the ban. Another 25 will be embargoed for import at the end of 2022; 25 more at the end of 2023; another 21 at the end of 2024 and nine on the New Year of 2026.



On the face of it, this is a laudable indigenisation initiative. “Our aim is to apprise the Indian defence industry about the anticipated requirements of the armed forces, so that they are better prepared to realise the goal of indigenization,” declared Mr Singh at the release of the first list last August. He called it “a great opportunity” for the defence industry to deploy their own research, design and development capabilities, or take technology from the Defence Research & Development Organisation (DRDO) and manufacture products for the military. To be sure, a Positive Indigenisation List provides assurance to the domestic defence industry, which has frequently burned its fingers by expended money and research effort on developing a defence product, only to see the MoD import it from the global market instead.

 

However, there are legitimate questions over the usefulness of the lists released so far. Defence industry experts observe that defence firms already possess the capability to build at least two-third of the items specified. One chief executive agrees that the two lists together appear to be a summary of what is already under development in the country and nearing production.

 

To assess the efficacy of this incremental import ban, consider first the 69 items that were embargoed for import in the first list on January 1, 2021. This restricted the army to Indian suppliers for tracked, self-propelled and towed artillery guns, multi-barrelled rocket launchers of the Pinaka class, sniper rifles and bulletproof jackets and helmets. The navy is required to indigenously build several categories of warships, such as missile destroyers, next-generation missile vessels, anti-submarine craft, offshore patrol vessels and sonar systems and weaponry. The Indian Air Force (IAF) will have to build in India its requirement of light combat fighters (LCA) and helicopters, light transport aircraft, and parachute delivery systems for air-dropping stores and equipment.

 

In fact, this list presents little challenge to Indian manufacturers, who are well along in building these items. Larsen & Toubro has delivered 100 self-propelled artillery guns to the army and its production line near Pune lies idle, awaiting further orders. In towed artillery, the Ordnance Factory Board is confident about its indigenous 155-millimetre Dhanush howitzer, while the DRDO is putting its Advanced Towed Artillery Gun System (ATAGS) through user trials. The Pinaka rocket launcher is being manufactured in numbers already and more orders are awaited from the Indian Army. Similarly, the embargo on importing a range of warships only recognises an existing reality; out of 41 naval warships and submarines under construction, 39 are being built in Indian shipyards. Orders for 103 Tejas fighters have been placed with Hindustan Aeronautics Ltd (HAL), which is also anticipating large orders for its indigenous light attack and light utility helicopters and HTT-40 trainers.

 

The same is true for equipment that will face an import embargo from this year-end. Making the indigenisation bar easier to cross is the MoD policy that considers platforms built in India under transfer of technology (ToT), with 50 per cent indigenous content, as Atmanirbhar Bharat products. Scorpene submarines are already being built at Mazagon Dock Ltd (MDL) under ToT from Naval Group. The French shipbuilder is keen to build more Scorpenes, even as tendering proceeds for six more conventional submarines that will also be built in India. Nor is difficulty anticipated in building indigenous light helicopters (HAL); next-generation corvettes (Garden Reach Shipbuilders); armoured vehicles, anti-tank guided missiles and medium range surface to air missiles (DRDO), warship grade steel (Steel Authority of India) and other items listed.

 

Looking at the systems farthest into the future, self-reliance is mandated by December 2025 for long-range cruise missiles, anti-material rifles (AMR) and a 1,000 Horse Power tank engine. The DRDO (Nirbhay cruise missile) and the Kirloskar Group (tank engine) have these projects in hand.

 

For reasons unknown, an Indian company that wishes to design and develop a platform in-country, rather than by teaming with overseas OEMs, gets no preference in the “Atmanirbharta” scale. An example is L&T, which wanted to develop the “future infantry combat vehicle” ground-up in India but found that the MoD would give it no priority over the competing Indian firms, all of which were in partnering foreign OEMs that would control a major share of the intellectual property associated with the project. 

If the MoD is serious about Atmanirbhar Bharat, it would frame its indigenisation targets with far greater thought and set up robust technological, project management and evaluation structures. Rather than focusing on low-hanging fruit and relying on foreign OEMs to meet production targets, each product targeted for indigenisation would cater for a realistic development time-frame, a highly qualified project manager who is guaranteed a realistic tenure and an adequate R&D budget. The unhealthy obsession with L-1 (lowest bid) tendering must be thrown overboard to avoid projects being derailed by companies that have a proven modus operandi of bidding unrealistically low and then failing to deliver. Instead, the MoD must institute an L-1, T-1 system, in which an unreasonably low price is not enough to gain an unfair win; along with price, a superior technology plan and project management plans are as important.




1 comment:

  1. There must be somewhere , where one is given data as to the reduction in imports expected in each of the items notified - which would give the layman a sincere appreciation of the strides made or sought to be made - Perhaps a new Ministry of H & M ought to be considered to co-ordinate all the Headlining and Messaging across all sectors of the Economy which could also incorporate a Slamming and Deriding Section that could be a progenitor for the proposed BBC like new International media outlet to be run by Doordarshan - perhaps aptly titled Duniya darshan

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