As India is one of the fastest growing aerospace markets in the world, the procurement list of military and civil aircraft and components is going to be enormous over the next two decades. It is time that the emerging global power takes firm steps towards self-reliance.

India was technologically far more advanced than China when the British left the subcontinent. Today, India’s Defence Research and Development Organisation (DRDO) with 52 laboratories and the massive defence production infrastructure by way of defence public sector undertakings (DPSUs) and ordnance factories, have not delivered the requirements of the armed forces either in quality or quantity. India is yet to build a strong defence technology and industrial base. Despite huge contracts from the Indian Air Force (IAF) and humongous budgets for DPSUs, indigenous hardware continues to have high import content.

The arms industry is a closed sector globally, controlled by just a few major players. Transfer of technology (ToT) contracts are the most difficult to interpret and implement. Global aerospace majors are reluctant to share high-end technology and arms embargoes are placed which create hurdles. When the Soviet regime came to power early in the 20th century, several aircraft designers migrated to the West. Similarly, when the Soviet Union disintegrated and economic collapse was imminent, Russian designers were literally boughtoff by Western and Chinese entrepreneurs. Hordes of Russian Jews moved to Israel. How else could Israel have offered a MiG-21 upgrade? ‘Moralistic India’ chose not to go ‘body shopping’. Reverse engineering is an area earlier mastered by the Soviets and now by China. If any country is to take the moral high ground, then joint ventures are the only interim option. It is thus time to recast the Indian aerospace industry for the daunting task of indigenisation through heavy investments, ‘focused’ on defence research and development (R&D). Last year, China earmarked $25 billion ( Rs. 1,37,500 crore) for this purpose.

There is an imperative need to make an honest appraisal of the level of indigenisation in the Indian aerospace industry. Figures touted are usually half-truths. The indigenous light combat aircraft, Tejas, has several imported components such as engine, radar, major avionics and bulk of the fly-by-wire system. DRDO’s pure research has not always resulted into end products and technologies have not been transferred to the industry. Dr K. Tamilmani, Chief Controller, R&D, DRDO, feels that R&D products must translate into end products and for that “translation of prototype drawings into production drawings with proper modularisation is essential to ensure that products emerge without sacrificing quality. This will help outsourcing to private industry”.

DRDO and DPSUs often complain that the armed forces prefer to ‘buy abroad’. Services counter that time and cost overruns and unreal promises have serious security implications. As for changing staff qualitative requirements, armed forces contend that excessive project delays render technologies obsolescent. Defence Minister A.K. Antony has urged the DPSUs to “design products that are acceptable and meet user requirements”. The Tejas is yet to clear IOC-2 and the intermediate jet trainer (IJT) is much delayed. Other flagship programmes like the Kaveri engine and basic trainer aircraft are behind schedule. Air Chief Marshal N.A.K. Browne, who supports indigenisation, feels that there must be accountability for delays and says: “We need to get our project management right before we embark on programmes. Monitoring teams of the user are required for all major programmes.”

Access to the military’s 15-year long-term integrated perspective plan (LTIPP) will facilitate planning by the industry. The Indian industry does have capability, as India has become a global hub for the auto industry. Its software strengths are unmatchable. Tata Power and Larsen and Toubro (L&T) manufacture the Pinaka multi-barrel rocket launchers. L&T was involved in developing a hull for a nuclear submarine for the Indian Navy, Tata Power is handling modernisation of airfield infrastructure and Reliance Industries is active in aerospace and homeland security. Mahindra has designed a small aircraft. Cassidian wants to make India a hub for defence products.

Former Air Chief Satish Kumar Sareen says: “DRDO and DPSUs have been claiming high levels of indigenisation but the well-known fact is that most components are imported and then labelled ‘Made in India’. In many contracts we have had transfer of technology clause but physically nothing significant has been transferred. The only way out is to join a major aviation player and train a large Indian team to build a technological base.” In the foreword to the Federation of Indian Chambers of Commerce and Industry (FICCI)-sponsored study by PriceWaterhouseCooper, Dr A. Didar Singh, Secretary General, FICCI, wrote: “The lack of level playing field for the private sector vis-à-vis the DPSUs and the foreign original equipment manufacturers (OEMs) continue to be a dampener on the enthusiasm and efforts of the private sector to be able to contribute meaningfully to the Indian growth story. India at this juncture is uniquely equipped to create a vibrant defence manufacturing base in the country with the right utilisation of its budget and modernisation spree. Yet we are losing the battle even before it has started.”

Air Marshal (Retd) V.K. Verma, Director, the Indira Gandhi Rashtriya Uran Akademi, in a paper presented to Assocham, has stated: “In the initial years, defence industry was designated as a core sector and therefore went into bureaucratic control with low accountability and peripheral involvement of the private sector. With economic slowdown in the West, we should resort to acquisitions and mergers. We have to consider strategic sale of part of DRDO and some DPSUs to major Indian corporates like Reliance and Tatas.” Sudhakar Gande, Vice Chairman, Axis Aerospace and Technologies, says: “After a series of DPPs, the government has done a commendable job in issuing a reasonably good policy framework and guidelines for offsets which is more balanced and has brought in greater clarity on various issues.”

Air Marshal (Retd) B.N. Gokhale, former Vice Chief of Air Staff, says: “There is lack of state-of-the-art research and innovation. The ultimate aim should be to innovate for technology and products. Till then, there is the need to take steps to leapfrog by collaboration with partners from within and outside the country, taking advantage of the ‘offset’ policy, where possible.” Rishi Malhotra, General Manager, Bell Helicopters, India, says: “India represents a significant growth opportunity for both sales and manufacturing and Bell Helicopter is committed to investing further in India’s growth. The Indian helicopter sector witnessed a slowdown between 2010 and 2012, but we expect a recovery in 2013. The Ministry of Defence (MoD) has taken significant steps at improving the procurement process and additional improvements will need to evolve as the processes mature. Contracting issues, retendering, unforeseen programme delays and uncertainties which accompany such programmes are risks that all parties will like to see mitigated.”

BAE Systems Global Chairman Dick Olver informed the Hindu: “With a presence that goes back over 60 years, BAE Systems has developed India as a home market with a strategic vision to become a major and integral part of the domestic Indian defence and security industry, leveraging its global expertise to develop technologies and solutions in India for both the domestic and export markets. There has been increased emphasis in recent weeks on the growing importance of rapid indigenisation of the defence sector. In addition to the economic benefits, increased jobs, improved capability and the development of critical technology, indigenisation would ensure India has ready access to the best available defence equipment. In support of that objective, in my view, an appropriate increase in FDI in the defence sector would be the most effective catalyst for self-reliance.”

Satish Kaura of Samtel India feels that to expedite indigenisation, the DPP should have equal consideration for private sector. “A separate Additional Secretary should be deputed to handle privatisation. This will increase dialogue and better understanding of industry problems. The procedures require further simplification.”