As the Aero India show gets under way in Bengaluru today, two facts are worth dwelling on. India is — and has been for three years — the world’s largest importer of defence hardware. Also, in a list of the 15 largest exporters of defence hardware, India simply does not figure. No other country with a serious defence budget has such a skewed import-export picture. Only one conclusion is possible: something has gone seriously wrong with the indigenisation effort, and with the building of a competitive defence hardware industry.
Not long ago, it had looked like a new leaf was being turned. The economist Vijay Kelkar had submitted a report suggesting (among other things) that private sector participation be encouraged when it came to defence production. After some initial steps in this direction, the government backtracked. Now, it is watering down the offsets condition that would have used import contracts to support related domestic manufacture (read Ajai Shukla in Broadsword on this page yesterday). There are large industrial houses that are capable of making a contribution, and indeed have shown interest in the business, but they are being systematically discouraged. The beneficiaries are not public sector rivals, as some might imagine, but international suppliers. If something is not done to change this situation, the skew in the import-export picture will continue to bear testimony to the failure of indigenisation in a vital area.
It need not be this way. Indigenisation of defence production began half a century ago, under a defence minister (V K Krishna Menon) who rightly carries some of the blame for the disaster of the China border war in 1962, but who was nonetheless the pioneer in promoting indigenous defence production. The country is not short of success stories even today. Hindustan Aeronautics (HAL) is basking in the afterglow of having launched its own combat aircraft (the Tejas), which stands up well in international comparisons and costs less than the foreign alternatives. HAL has also launched a combat helicopter (Dhruva) that enjoys an international market, and supplies sub-assemblies to Boeing and Gulfstream for civilian aircraft. It is now working with the Russians on a fifth generation fighter, comes 34th in a ranking of the world’s 100 largest defence manufacturers, and has a very healthy bottom line.
The country needs not one but many HALs, and it is a pity that the only other Indian company in the list of leading defence firms is Bharat Electronics. To be sure, some smaller companies are making a contribution, like the shipyards that are building an impressive array of naval vessels, ranging all the way from stealth destroyers to a nuclear submarine and an aircraft carrier. Also, for all its chequered history, the Arjun tank is now serving the army. But at a time when the country’s defence needs are growing because of a deteriorating security situation and an expanding horizon for the navy, domestic defence production needs a quantum leap. When the ticket size for international acquisitions is multiplying, it would be criminal failure of policy if more of the value addition involved does not take place in India, and if Indian designers and engineers are denied the opportunity to work on cutting-edge technologies that will inevitably have civilian spin-offs. This much is clear: current attitudes in the defence ministry will not deliver what is needed.