Prime Minister Narendra Modi’s call last year to ‘Make in India’ has fired up the imagination of the nation and the world alike. Speaking at Aero India 2015 in Bengaluru in February, Mr. Modi stressed that defence manufacturing was at the “heart of the ‘Make in India’ programme” and that we are “developing India’s defence industry with a sense of mission.” This has brought cheer to the Indian private industry, which has been long deprived of a level playing field, and the Micro, Small and Medium Enterprises (MSME) which have never been in the race due to long timelines and unending delays.
‘Make in India’ was brought into focus again when Mr. Modi announced in Paris that 36 Rafale fighter jets from France would be purchased — a decision sidestepping the original Medium Multi Role Combat Aircraft (MMRCA) deal for 126 fighter aircraft. But however good the initiative sounds, a closer look raises some fundamental questions on what it means in defence and what value it can accrue to the nation in terms of technological capabilities.
There seems to be a general perception that ‘Make in India’ is the magic solution for developing India’s fledgling domestic military-industrial complex. There is no doubt that ‘Make in India’, if implemented well, has the potential to bring in a manufacturing revolution, which India missed during the early phase of economic transition when it leapfrogged from an agrarian to a service economy. It has the potential to create hundreds of thousands of jobs for all those who graduate from our educational institutions every year. But having said that, the ‘Make in India’ campaign has its limitations in what it can and cannot do to build capabilities in the country.
The initiative is only one half of the framework needed to realise the goal of technological sovereignty and self-reliance in defence production. It will achieve its purpose once the share of manufacturing in GDP goes up, which in itself is no mean task. Beyond that, for technological sovereignty in defence, it has to be complemented by a ‘Made in India’ effort or a drive for indigenisation.
There is a lot of talk about ‘Make in India’ bringing in greater Foreign Direct Investment (FDI) and technology transfer in defence, thus giving access to critical technologies. But the fact remains that whatever price is paid or strategic partnerships are forged, no one will part with their core technologies. India has been assembling Russian fighter aircraft and tanks for decades, got in technology for guns and submarines, but it is still nowhere near building them on its own. In fact, if those efforts had fructified, India would not be importing, but exporting medium multi-role combat aircraft. Critical technologies must be developed indigenously, whatever the cost. This is the case in point with some upcoming big ticket deals like submarines and aircraft carrier technologies.
India has been attempting indigenisation since Independence in different fields with varying degrees of success. While atomic, space and strategic missile development saw tremendous progress, positioning India as a global player to reckon with, other fields such as defence are still in their infancy. It is bewildering that a country which can build inter-continental ballistic missiles and launch interplanetary missions cannot manufacture assault rifles, bullet proof jackets and snow boots. In fact India’s development efforts are riddled with several such paradoxes. While it has literally mastered rocket science,overcoming technology denial regimes, it falls flat on the basics. In fact, therein partly lies the answer. Technology denial had inadvertently benefited this country, the long learning curve notwithstanding.
‘Made in’ versus ‘Make in’
The biggest anomaly with indigenisation in India is that we take great pride in the percentage of indigenisation. A smaller percentage of indigenisation is met by imports, which usually happen to be the most critical components — the engine, avionics, radar, sensors, and so on. We do not need 60-70 per cent indigenisation. Ideally it should be the other way around. Let the government labs develop the critical 30-40 per cent and outsource the remaining components to competent manufacturers in the industry, which will ensure better quality and availability at a competitive price. The ripple effect will create a supply chain ecosystem in the country. This presents an opportunity for the industry to take the lead and make India a global hub for components on the lines of the automobile industry in which India has emerged as the hub for small cars.
In addition, there is a discrepancy even in those percentages. For instance, in the case of the Light Combat Aircraft Tejas, while the Aeronautical Development Agency had put the indigenous content at 70 per cent, a recent Comptroller and Auditor General report said it “actually worked out to about 35 per cent” as of January this year, as critical systems such as the engine, the multi-mode radar, the display systems and the flight control systems were imported. Further, based on the principle of incrementalism, moving from zero to, say, 60-70 per cent is relatively easier; the challenge lies in pushing beyond that in phases.
For instance, the Navy, owing to some foresight, had set up a Naval Design Bureau and made impressive strides in ship design and construction comparable to the best in the world. But the challenge is the weapons and sensors on board, which are largely imported. To address this, a balance needs to be struck between the two India’s — ‘Make in’ and ‘Made in’ or indigenisation. They do not supplement each other.
The offset policy which has so far failed to yield any meaningful returns needs to be tweaked. This can be an enabler in developing the required skills in shaping the ecosystem, as Mr. Modi said during Aero India — “I want our offsets policy not as a means to export low-end products, but to acquire state-of-the art technology and skills in core areas of priority.” Placing a moratorium on import of certain class of products/technologies presents a sensible option.
Defence Minister Manohar Parrikar had echoed a similar view a few months ago when he said 10-15 critical technologies would be identified and frozen for indigenous development. It’s time to enshrine that in a policy and the upcoming ‘Make in India’ for defence policy is the appropriate framework with a separate component to address the issue of ‘Made in India’.
India’s ambitions of being a great power fall flat as long as it is dependent on imports for military hardware. It is time to realign the ‘Make in India’ initiative to derive true value out of it. ‘Make in India’ needs a course correction to position it within the larger realm of technology development. Only then can India insulate itself from external pressures and exercise strategic autonomy in decision-making.