Self reliance plays at Aero India 2021
The year 2021 started with positive signalling towards ‘Atmanirbhar’ Bharat. In the second week of January, the Cabinet Committee on Security (CCS) cleared the purchase of 83 Light Combat Aircraft (LCA) Mk1A, including 10 trainers, to be built by Hindustan Aeronautics Ltd (HAL) at a cost ranging between Rs 38,000 to Rs 47,000 crore (depending upon which media report you refer to). An improvement on Mk 1, the ‘A’ of the new fighter would incorporate such enhancements as Electronic Warfare System, Advanced Electronically Scanned Array (AESA) radar, beyond visual range (BVR) missiles and software defined radio.
In a ministry of defence (MoD) press release, the defence minister insisted that while LCA-Mk1A has 50 per cent indigenous content, over time it will be increased to 60 per cent. The first of these aircraft will roll out by 2023-24. To ensure that there are no slippages on the timelines, HAL is likely to set up a third line of production. Incidentally, it is also executing the orders for 40 LCA-Mk1, which were ordered by the Indian Air Force (IAF) in the batches on 20 each of Initial Operational Clearance (IOC) and Final Operational Clearance (FOC). While 16 of the former have been delivered so far (and operate from Air Force Station Sulur in Tamil Nadu), the delivery of the latter is to commence soon.
In an interview to a news agency, the day after the CCS decision, chief of air staff, Air Chief Marshal RKS Bhadauria said, “Order of 83 aircraft is huge. When this kind of order takes shape in the next eight-nine years, the entire ecosystem will get set up. For military aviation, it will be a big step. It will make a big base for fighter aircraft production, maintenance and support.” He added, “It is a huge step for IAF capability building. It is also a big boost to our indigenous industry. It is also a big recognition of our designers. It is a huge step for Indian Air Force (IAF) and for the country.”
Even though the current LCAs held by the IAF are deployed away from the front, perhaps they are being put through their paces, the CAS told his interviewee that eventually the LCA fighters (the recent approval of 83 will take the total number in service to 123), which will give the stand-off weapons capability to the IAF, will be deployed on the frontline.
No one can argue with CAS’ contention that the order of 83 fighters, expected to be placed during Aero India 2021, is huge. He is also correct in saying that it will create an entire ecosystem for military aviation in India. If things go according to the plan, then this ecosystem will become the springboard for future fighters, including the 5th generation. Hopefully, that will not take as long as the LCA did.
However, two questions remained unasked. One, does the LCA fighter programme really usher in atmanirbharta or self-reliance? And two, between self-reliance (actually self-sufficiency is more accurate, but that’s immaterial) and operational preparedness, what is the critical military requirement? An ancillary question that would fit in between the above two is, should self-reliance in hardware even be a desirable goal, given the development cost and fast obsolescence of technology? More on that later.
But first thing first. Why did the government of India switch from the pragmatic ‘Make in India’ to anachronistic ‘atmanirbhar Bharat’ which has the echoes of ‘swadeshi’ that Gandhi called for during the struggle for freedom from the British?
In a single word, the answer is China. Even before the crisis broke out on the erstwhile Line of Actual Control (LAC) in late April 2020, the industrial capacity of China had been exercising the popular nationalist sentiment. This is the reason from time to time the government, led by the Prime Minister himself, used to urge the citizenry to shun Chinese goods in favour of Indian wares. This appeal used to be more fervent before the festive season started August onwards and China-made home décor items (mostly low-tech, small value items) used to flood the Indian markets.
With Covid-19 impacting global trade, the slogan of self-reliance sought to inject the right amount of nationalistic sentiment among people forced into isolation by the pandemic. And then China sauntered into the Indian territory, forcing even greater reliance on nationalism. For want of popular options, ‘atmanirbharta’ or self-reliance was made to shoo-off ‘Make in India’ even in defence.
Prime Minister Modi was conscious of the limitations the term imposed. Hence, appearing in a webinar organised by Federation of Indian Chambers of Commerce & Industry (FICCI), titled, ‘Atmanirbhar Bharat—Defence Industry Outreach’ on 27 August 2020, Modi explained that his vision of ‘Atmanirbhar’ Bharat did not envisage an inward-looking or isolationist India as the phrase suggested. Instead, it aimed “…To make the global economy more stable, for global peace, and making India a self-reliant country.” This was the most amazing interpretation of the term self-reliance. How India making its own weapons would stabilise global economy or usher in global peace remained unexplained.
But even more amazing, unprecedented even, was Prime Minister’s presence in a webinar organised by the association of private industry. Given that the webinar was held to discuss the latest version of the defence procurement policy, renamed as Defence Acquisition Procedure (DAP) 2020, which for the first time in many years openly made the private sector subordinate to public sector (after decades of promising level-playing field), it was gracious of the Prime Minister to deign to make an appearance on a forum like this.
The good thing about the amorphous definition is that one can interpret it whichever way one wants. And so, ‘Atmanirbhar’ Bharat could mean ‘Make in India’ in Hindi. Or it could mean, ‘anything goes,’ as long as some part of the production happens in India.
To go back to the LCA, it is true that the fighter has been designed and developed in India (with a lot of hand-holding), and consequently has created a gradual learning curve. Also, along the way, as Indian developers of the LCA discovered that there were a lot of things that they could not do in country, they procured it from the world market. As defence minister says, LCA has 50 per cent indigenous content. Read differently, 50 per cent of the LCA is made of imported material. In terms of technology and cost, the ratio of 50:50 skews sharply towards imports. So essentially the integration of the fighter has happened in India. Fair enough. There aren’t many countries in the world which can build their own fighter planes. What’s more, even those who build their own fighters, do not build everything themselves.
However, the problem with LCA is different. By the time it comes into service, technology in the Indian neighbourhood would have galloped. Though India has announced its own 5th generation fighter, even the prototype is not ready until now. Even if it benefits from the learning of the LCA, it will still be a decade if not more before it enters service. That is the time other militaries would have increasingly moved towards unmanned, autonomous (if not completely intelligent) fighting platforms, incorporating both speed and stealth. Given this, the IAF investment in the LCA will not lead to the building of the right ecosystem. Certainly not the one which would usher in an age of ‘atmanirbharta’ in the technologies of the future.
Perhaps, the better option would have been to induct the minimum possible LCAs for the sake of supporting the indigenous effort—and also as an advertisement for the global market—and cleared the platform for exports. The money saved could have been invested in the next-gen fighter.
The second issue is self-reliance versus operational preparedness. The threat that the Indian military used to project as the long term now appears to be intermediate, if not immediate. While India’s relations with Pakistan have not been worse than what they are today, China is consistently expanding its occupation of Indian territory. While in 2010 it had declared that it does not have a border with India in Ladakh, two weeks back, Chinese foreign ministry spokesperson Hua Chunying said in a media briefing that, ‘We have never recognised the so-called Arunachal Pradesh illegally established on Chinese territory.’ Incidentally, she referred to Arunachal Pradesh as Zangnan, which, according to China, is southern Tibet.
Under these circumstances, if the IAF had the money to spend, and if it felt that it needed more air combat platforms, shouldn’t this scarce resource be spent on a proven platform—the multirole fighter aircraft (MRFA) perhaps?
The third in-between question is in the realm of rhetoric. This may or may not be an old saying but it fits. If you can’t fight them, you disrupt them. Perhaps, of the money being spent on hardware for nationalistic reasons, some could be spent on disruptive software technologies! That, of course, is the IAF’s call to take. But since all of this flows from DAP 2020, it may be useful to broadly understand what it says and what it means. DAP 2020 needs to be seen in the context of government initiatives preceding and succeeding it.
Young Have the Edge
At DefExpo 2018 in Chennai, Prime Minister Modi launched the concept of Innovations for Defence Excellence (iDEX). To be pursued under the department of defence production, iDEX is run by a government-instituted Defence Innovation Organisation (DIO), which in turn has created Defence Innovation Fund (DIF). Collectively these acronyms oversee and fund individual or small level innovators, who will be mentored by academic institutions like Indian Institute of Science (IISc), Indian Institutes of Technologies (IITs) etc. To lend a semblance of competitiveness, DIO organises DISC (Defence India Start-up Challenge), in categories like see-through armour, data analytics for air trajectory, unmanned surface and underwater vehicles, artificial intelligence in logistics and SCM and so on. So far five competitions have been conducted, winners announced and felicitated by the defence minister.
iDEX is aimed at individuals, defence start-ups and Micro, Small and Medium Enterprises (MSMEs). The idea is that once an innovation or technology matures to the extent that can be productionalised, it will be bought over by the DRDO or transferred to select Defence Public Sector Undertakings (DPSUs); in effect, reducing DRDO’s burden of basic research. So that there is no doubt on this score, defence minister Rajnath Singh, at the August 27 webinar said that ministry of defence (MoD) has earmarked Rs 52,000 crore from the capital budget for procurement from the domestic industry. The job of clarifying what the domestic defence industry meant was left to Chief of Defence Staff Gen. Bipin Rawat, who, speaking before Singh, said that projects are being reserved for MSMEs. And government has kept Rs 52,000 crore for Indian industry including the DRDO, DPSUs and MSMEs.
Part of this money is being spent on projection. For instance, at the Indian Army Day parade on January 15, the demonstration included attacks on fixed targets by armed rotary wing drones. The hexacopter drones that crashed into ground targets such as terrorist hideout, army tank, fuel depot, radar and so on, were developed by a start-up private sector company. No wonder defence secretary Ajay Kumar had said in December that, “The start-ups are particularly strong in digital technologies and as we move towards weapons and equipment becoming smart and unmanned, the importance will continue to grow.”
Clearly, the private industry that the government favours are the MSMEs or start-ups, which need government hand-holding more than the big guns. As a result, they are likely to not only remain subordinate to the ministry but the ministry-run public sector undertakings. This is the public-private partnership model that the government is promoting because the DPSUs are comfortable with this. They remain the lead on all projects, including the ones where technology is needed to be transferred from a foreign OEM. As lead, whatever tech-transfer happens, remains with the government-owned enterprises, which then generously dole out work to the small private sector companies.
A few years ago, chairman and managing director (CMD) of one of the DPSUs, had told me in an off-the-record conversation that the problem with the private sector is that it is in a great hurry. “It wants to build a fighter plane or a submarine right away. It needs to first start by becoming part of our supply chain; do job-work for us. That’s the way to gain experience.” The challenge then, as now, is competition. After years of lip service, the MoD has finally cut it to size.
The August 27 webinar was an eye-opener in many ways. While on the one hand the MoD was buoyant about ushering in an era of atmanirbharta (self-reliance) by promoting indigenous industry, on the other hand, the representatives from the industry were still grappling with fundamental issues. For instance, president FICCI Sangita Reddy in her welcome address referred to the need for clarity on the ‘definition of an Indian vendor.’ She probably meant whether Indian subsidiaries of multinational OEM would be considered as an Indian vendor. Or a joint venture with majority holding by a foreign OEM would be considered an Indian vendor.
Slogan as Policies
As mentioned earlier, DAP 2020 has to be seen along with other policy initiatives. Succeeding the DAP was the draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020) announced on 3 August 2020. DPEPP envisages reaching an export turnover of Rs 35,000 crore (USD 5 billion) by 2025.
Currently, Indian companies, including at least 50 in the private sector, export defence goods worth Rs 10,745 crore (2018-2019) according to the department of defence production. These include ‘personal protective items, Offshore Patrol Vessels, ALH helicopter, SU Avionics, Bharati Radio, Coastal Surveillance Systems, Kavach MoD II Launcher and FCS, and spares for radar, electronic system and light engineering mechanical parts.’
As is evident, with few exceptions, most of the items that India exports are low-technology. Their value lies only in terms of the foreign exchange they bring in the country. They are in no way reflective of either a defence industrial or defence technology base in the country. Nevertheless, exports are exports, and gives one a feel-good sense in saying that India is among the 35 defence-equipment exporting countries in the world, as FICCI president Reddy said during the webinar. According to the statistics by SIPRI, India ranks at number 23.
With the aim to improve this ranking, the draft DPEP 2020 lists a number of ways in which this objective will be pursued. These include:
- Leveraging of defence attaches. In addition to their existing role, defence attaches will also market indigenous defence equipment abroad. In this, they will be assisted by DPSUs. The government will assign specific regions for development of markets to select DPSUs;
- Government to government promotion. Shunning its inherited diffidence, the government will push indigenous defence equipment in its bilateral dealings with select countries. Depending upon the nature of strategic relations with that possible buyer country, the government may offer lines of credit or even partial funding of the equipment;
- Strengthening of the Export Promotion Cell through greater coordination with the defence industry;
- DPSUs and OFBs to ensure that at least 25 per cent of their revenue comes from exports;
- Leveraging defence offsets by factoring in some amount of export;
- Professional marketing and branding of exhibitions like DefExpo and Aero India at international events; and
- Defence services, the first users of the indigenous defence equipment, would be urged to explore opportunities to showcase Indian equipment globally.
While all this is laudable, it calls for a change of mindset within the MoD. For instance, until 2019, at all international defence exhibitions, Indian pavilion comprised only the DPSUs, which are selected by rotation and not by their usefulness for the show. For instance, defence shipyards were asked to exhibit at a show for land systems because it was their turn to participate in an international event! Worse, the small Indian private sector companies which exhibit at these shows are not allowed to become part of the India pavilion. As FORCE has repeatedly written in the past, MoD and the private industry (bodies like FICCI/ CII etc) should book space collectively and sublet booths to MSMEs. This way, not only will India have a bigger country pavilion, visitors would be able to find all Indian enterprises in one place.
However, the bigger challenge remains the defence equipment itself. Despite India’s growing exports, Indian armed forces still import most of its equipment, even in the mid-tech category. Beyond the slogans and optics, even the government is conscious of this fact. Take the case of LCA. Since most of the high technology and expensive equipment in the fighter has been procured from global vendors, the cost of the fighter is not very competitive in its category. Hence, attempts in the DPPs and now the DAP to only progressively increase the indigenous content in procurements.
For example, a new Buy (Global—Manufacture in India) category has been introduced in which a limited quantity can be bought off-the-shelf and the remaining will be produced locally with at least 50 per cent or more indigenous content. The earlier ‘Make’ category has been renamed as design and development (D&D), perhaps to emphasise upon the fact that this refers to platforms/ systems designed and developed in India from the scratch, even though they can have up to 50 per cent imported content. The D&D category has been sub-divided into Make-I, Make-II and Make-III. The first of these refers to programmes which the government of India funds. However, the percentage of funding has been reduced from 90 to 70.
The Make-II will comprise programmes whose development is funded by the Indian industry, which implies the private sector. Heeding the long-pending demand of the private sector, the MoD has allowed for a single vendor situation provided the wares on the table are unique, state-of-the-art or pertains to either aero engines or computer chip-making.
License-production, or indigenous development of sub-assemblies, small components—mainly for spares and product support—as import substitution will fall in the Make-III category. These assemblies/ sub-assemblies can be produced under transfer of technology from the foreign OEM. However, they must have at least 60 per cent indigenous content.
Like the draft DPP, DAP has created ‘Leasing’ as a new category of procurement. According to DAP 2020, the services will be encouraged to lease equipment in cases,
- ‘Where procurement is not feasible due to time constraint;
- Where the asset/ capability is needed for a specific time or would be under-utilised if procured;
- Where smaller numbers… are needed and administrative/ maintenance infrastructure expenditure would be high;
- When service life lease rentals are a better option compared to a one-time acquisition cost;
- To gain experience for operational exploitation of equipment; and
- Due to operational necessity’
The list of equipment that the government may consider for leasing include transport or lift aircraft (both fixed and rotor wing), training aircraft including helicopters, Airborne Early Warning Systems (AWACS/ AEW&C), radars, surface ships, submarines and simulators among others. Incidentally, according to media reports, Indian government is in talks with Israel for purchase of two more Phalcon AWACS systems based on the Russian IL-76 aircraft. Clearly, the gap between intention and requirement remains quite wide.
The third document to be released was a negative list for imports. On 9 August 2020, MoD issued an import embargo list featuring 101 items, which will not be imported after December 2020. According to the government release, this list will be followed by another with embargo starting December 2021 and then the third one with embargoes coming to force from December 2022.
A lot of items included in the list are already being manufactured in India by the DPSUs under license-production. Many were earmarked to be built by the private sector a decade ago, like Armoured Fighting Vehicles, and remain in the pipeline despite the prototypes being ready and several revisions to the original qualitative requirements. Still other programmes, like the ship-borne cruise missiles are being made in India in partnership with Israel. And as far as personnel weapons are concerned, the government has already established a joint venture company with Ordnance Factory Board, Russia’s Kalashnikov Concern and Rosoboronexport. Called Indo-Russia Rifles Private Limited, the company stakes are held in the ratio of 50.5:42:7.5 with India having the lead of one per cent.
The most critical omission in the negative list is clarity on components. Even if platforms are being made in India, some of the key components that go into those platforms continue to be bought from abroad. If a platform figures in the negative list, then does it mean that everything that goes in the making of that platform will also be embargoed?
As of now, the negative list is more notional than real. Worse, in its present form, DAP 2020, is similar to such exercises undertaken in the past; and hence remains a half-way house unless the elephant in the room is addressed—research and development. Instead of making DRDO accountable for its research projects, the DAP and DPEPP are simply leaning on start-ups and MSMEs in the belief that these will deliver technologies which government organisations couldn’t. They may. But this is a long-term vision. Since this is going to be a long-term exercise, it makes no sense for them to work on technologies that exist today in the world, even if India does not own them, because they will be overtaken by new technologies.
Instead of a negative list, what is needed is a positive list of futuristic defence technologies, whose development the government must finance, sector notwithstanding. If the idea is to strengthen Indian military’s war-preparedness and energise the defence industry too, then we need the right models. Buy what is available in the global market, whichever way it works. And develop what nobody will give us.
Self-reliance is a reactionary, defeatist slogan. In an interdependent global economy, our goal should be to produce cutting-edge, competitive products which the world would want to buy from us. That’s the atmanirbhar definition we must aspire for.