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Self Reliance in Defence Production

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June 22, 2018

What is the issue?

  • The Defence Production Policy (DProP) 2018 has set ambitious goals for 2025.
  • There is a need for some fine tunings in defence industry to achieve the goal of self reliance.

What does the policy provide for?

  • It includes provisions for boosting production, exports, and investment.
  • It would, thereby, create two-three million jobs domestically.
  • It also aims to achieve global leadership in artificial intelligence and cyberspace technology.
  • To drive this policy, the government has identified 13 product categories.
  • It has permitted 74% FDI in “niche” technologies.
  • It plans to develop two defence production corridors.
  • It also plans to constitute private sector units and to establish defence innovation hubs.
  • Given all these, there are some misconceptions as to the strategies adopted for self-reliance in defence manufacturing.

Why is the FDI route less likely to work?

  • There is a mistaken belief that production companies decide on transfer of technology.
  • But it is the governments, not manufacturers that decide technology transfer.
  • It is based on political and military considerations, geopolitical factors and long term business commitments.
  • It is also believed that foreign manufacturers would be attracted by the mega Indian market for their products.
  • However, certain cutting-edge technologies are closely guarded.
  • Foreign companies will not part with them under any circumstances.
  • Also, no government can assure the foreign companies that orders will continue to be placed for all time to come.
  • Clearly, the FDI route is no salvation for self-reliance in defence production.

What is the challenge?

  • Military needs reliable combat/combat support systems to counter threats.
  • Technology of the equipment should match, or preferably be better than, the technology of the adversaries.
  • The military expects product support, trainers and simulators.
  • It also requires mid-life upgrades during the equipment life cycle which typically will be about 20 years.
  • Importantly, research, design and development and manufacture are closely coupled.
  • However, in reality, domestic industry lacks the capability, domain knowledge, skill, expertise and experience or capacity.
  • It includes adequate trained manpower, specialised test facilities, test ranges, etc.

What could be done?

  • DRDO - Industry could be the lead agency for development of new products.
  • However, it may sub-contract development of certain sub-systems to a DRDO laboratory.
  • The industry’s managerial expertise and DRDO’s technical expertise could be coupled for optimum results.
  • Funding - Presently, the MoD funds the DRDO for development of new products.
  • It results in minimal interaction between the armed forces and the developer.
  • Instead, the armed forces should fund these developments from their own budgets.
  • This would be an essential structural change which would give them a sense of “ownership”.
  • It will give the armed forces an incentive to
  1. monitor the progress at regular intervals
  2. participate in inevitable trade-offs between conflictual requirements
  3. make-buy decisions
  4. trials at sub-system stage
  5. authorise release of funds based on accomplishment of milestones, etc
  • It would also minimise time and cost overruns and shortfall in specifications.
  • The armed forces would need to develop project monitoring skills.
  • Manufacturing ecosystem - The manufacturing industry is organised into a three/four tiered structure.
  • Tier one companies are “integrators”.
  • The whole chain forms an “ecosystem” which the DProP 2018 recognises.
  • However, it is industry which can create and nurture such ecosystems, not the government.
  • To assure long term loyalty and commitment, tier one companies have to necessarily support MSMEs initially.
  • The defence production sector would need about 20 tier one companies and several lower tier companies.
  • All these in conjunction can make the DProP 2018 a successful one towards self reliance in defence production.

 

Source: BusinessLine

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