The year 2019 marks India’s 70th Republic Day. India holds the largest democratic exercise in the world- Election 2019. Defence as the industry if taken as the main agenda may redefine our capabilities and be the catalyst of our economic growth. Keeping the debate at the forefront, BW Businessworld's Manish kumar Jha speaks with veteran Infantry General S. Asthana, who has had a distinguished 40 years of varied experience in national, international fields and UN. A globally acknowledged strategic & military analyst, he is currently the Chief Instructor of USI of India, the oldest Indian Think-tank in India.

Photo Credit : BW Businessworld,

Do you think that Govt. or political parties intend to put defence (Industry) as the topmost priority? Do you think defence is the main agenda in their manifesto?

In the aftermath of fidayeen attack by JeM on CRPF convoy at Pulwama, and successful Indian airstrike at Balakot in Khyber Pakhtunwa Province of Pakistan across the International border gave some important strategic messaging to Pakistan as well as within the country, which will have to be considered in formulating any security policy framework at strategic level for any future Government.

• While India tried a peaceful ‘Defensive Strategy’ against Pakistan’s proxy war for many decades, the time has come to change it to ‘Offensive Defensive Strategy’, wherein India strikes at the training camps of terrorists where ever they are located, even if it amounts to crossing Line of Control (LoC)/International Border(IB).
• After Pakistan became a nuclear state it sold off the narrative to continue with Proxy war against India and should India choose to retaliate by crossing LoC/IB, it will respond with nuclear option. The Balakot air strike called of this bluff or nuclear blackmailing of Pakistan. 
• The air strike proved that a space exists for conventional war, as against the myth propagated by Pakistan that the escalatory ladder was from Proxy war to Nuclear War. This myth did affect some decision makers; hence India had to continue bearing the proxy war for too long. This myth stands broken and now India needs to improve its conventional capability.
• The deterrence value of India had gradually reduced post 1971 operation, as a result of poor defence manufacturing base, slow procurement process, low defence budgeting and rising cost of military hardware globally resulting inadequate procurement of state of the art equipment. The fact that Pakistan tried Kargil misadventure means that conventional deterrence was very low.

The continued loss of our brave soldiers and innocent civil population peaked by Pulwama attack has raised the national sentiments as well as awareness of the population about the importance of national security, which can no longer be ignored by any political party in 2019 elections and beyond. The capability development to ensure national security in conventional, cyber, information, space and other domains of warfare cannot be developed by Defence procurements alone, because it is unaffordable and reduces our reliability at critical junctures, hence defence manufacturing, ‘Make in India’ and defence industries including private sector have to be given a push.  This has to be a top priority of any future government, hence political parties need to have it on top of their political agenda and should include it in their manifesto to convince the countrymen about their concern for safety and security of the country and the population.             

What is your thought on the defence industry in terms of building capability, capacity and as a catalyst of industrial growth in next 5 -10 years in India?

India having the second largest Armed Forces in the world (in numbers) cannot afford to be the largest purchaser of military hardware in the world, as it reduces its capability of self reliance. No military in the world can afford all state of the art weapons and equipment. 

The ideal percentage that a military should have 30 percent state of the art newly inducted weapons and equipment, 40 percent current profile and 30 percent obsolete/about to be obsolete weapons and equipment. In India this ratio is very poor since many decades. In fact British deliberately did not shift manufacturing hubs of military armaments to India, hence we see that post independence India has a large military force (considering  its geography, threat and unstable neighbours), but it had to purchase military hardware to an extent that it has been the largest purchaser of military hardware in the world.

There is a need to be self-reliant at a much faster pace than what Indian track record has been in last few decades. There is a need for private sector to take on some defence manufacturing, along with public sector, but the cost of Research and Development in this field is very heavy. The conditions therefore have to be created that it makes economic sense to private sector and there should be no protectionism to public sector to give everyone a level playing field.

 A right mix of ‘Make in India’ as well as purchase of state of the art equipment with transfer of technology is the right model to go further, because one sector cannot substitute the other, till we attain a reasonable state of self reliance. In my opinion, we should fix our aim of achieving self reliance up to 80 percent by 2030 as a reasonable goal. We are already manufacturing a large amount of low end and dual use technological equipment, and if every future purchase is with technology transfer, the target may appear doable.

How do you look at defence industry as the Next BIG Thing in terms of economy, skills, technology and jobs?

 My opinion is that all decision makers should look at defence manufacturing as one of the largest profit making industry, which besides fulfilling the requirement of our security forces, should aim to capture a major share of Asian market by 2035 and progressively global market by 2047, on centenary of our Independence Day. All major countries like US, China and some western countries are earning substantial amount of foreign exchange by sale of military hardware. Indian economy is presently growing mainly due to service sector, but for it to grow beyond a point; it has to be based on manufacturing and infrastructure development, besides the existing engines of growth. The attitude of Government machinery towards Defence manufacturing has to change, treating it as potential profitable investment, which may have incubation period to sustain. This is not possible without incorporating private sector into it besides the public sector. 

India has largest technically qualified, young, english speaking manpower in the world. We also need to develop our skills in Defence manufacturing, which is possible only if we absorb the youth into it. India needs to have policy framework to encourage private sector into Defence manufacturing through collaborations with foreign companies who have strong Research and development base and are willing to manufacture in India with transfer of technology. These measures will make us self reliant in defence manufacturing, provide us security against regular supply of hardware and improve our surge capacity in times of crisis. These steps will automatically help in job creation.

The challenges in terms of huge R & D, technology gap, and cost- overrun are overwhelming. What is required in terms of policy overhaul that can really make the difference?

I do appreciate that R&D in Defence manufacturing requires very heavy cost, which is unbearable for any start up Private Sector Company, unless it has a firm order of that magnitude to make it economically viable. A prior order is not possible because it is against the procedure and may give rise to crony capitalism. 

Our Defence Research and Development Organisation (DRDO) has enjoyed protectionism for very long and has not been able to deliver as much as some of our other successful Government research organisations like ISRO have delivered. We therefore need to fix the accountability for the heavy investments made in it so far. Similarly EME has one of the largest pool of engineers in the country, but the talent has not been adequately utilised in up gradations of indigenous equipment. The conditions therefore have to be created that it makes economic sense to Private Sector to invest in defence manufacturing and there is no protectionism to public sector to give everyone a level playing field. 

A right mix of ‘Make in India’ as well as purchase of state of the art equipment with transfer of technology is the right model to progress defence manufacturing. We also need to allow collaborations with reasonable control between Indian and foreign companies, as well as DRDO and Indian companies to sustain the cost of R&D. This will fulfil the technological gap as our companies will be able to collaborate with the foreign vendors, producing state of the art military equipment. 

The DPP needs to be made simple and workable to avoid delays. It is a comprehensive document which kept increasing the set of rules to prevent corruption, and now Defence Ministry is stuck with it, in a manner that no equipment can be procured in a timeframe, within which  next generation equipment is already in the market by the time you procure the item approved initially. In fact it is interesting to note that the procurement of same item in Home Ministry is generally faster than Defence Ministry. 

Please suggest how can the industries and private entities scale up? What is required in Offset Policy that helps technology transfer?

I have partially answered the question earlier. The crux is that the DPP has to be made simple, implementable and practical to be able to manufacture/procure in timely manner.  Many will argue that simplification of DPP or eliminating some steps where duplicity or double checks are involved may open some room for corruption.

I would like to argue that we must fix the accountability, convict and punish the corrupt in most strict manner whenever detected, instead of delaying a ‘New Industrial Revolution’ in the form of Defence Manufacturing. The same treatment must be given to the officials responsible for delays in the processes. I have rarely noticed anyone from MoD official/DRDO/OFB being punished for delays in Defence manufacturing process/procurement. In absence of accountability, a status quo syndrome has developed in the system in last few decades.

The incentive for technology transfer is the value of the contract besides a simple Offset Policy where the OEM has full freedom to choose offset partner. The improvement required is more in the process and ‘Ease of doing Business in Defence Manufacturing’. Encouraging ‘Government to Government’ (G2G) sales/contracts for equipment which is already in service in other Armed Forces can reduce delays. 

The major hesitancy in transfer of technology is cost of R&D and risk of losing potential market. These can be addressed through exhaustive contract negotiations and fair pricing, because we  need to realise that it is still a buyer’s market with many manufacturers competing for the same order, in the world. There is also a need to realise that no one will give 100 percent Transfer of Technology (ToT) of its futuristic or latest equipment. 

We should therefore be practical and not over ambitious and get the ToT of the equipment meeting our SQR and be ready to upgrade it using our technological potential in the manner in which Chinese were able to do so, without violating IPR regulations. We need to have faith in our scientists, because if ISRO can surprise many countries, why not others?  

(The views expressed are personal views of the author, and do not represent views of any organization. Major General S B Asthana can be reached as Shashi Asthana on Facebook, LinkedIn, and Google+, asthana_shashi on Twitter and S B Asthana on Youtube. website http://www.asthanawrites.org)