Indian Defence Industry – Backward? Non Existent?

Backward & Non Existent?

Backward? Yes. Existent?  Just about.

The entire business model of the defence industry is licenced manufacture from other countries. Fifty years ago that was a revolutionary step. Today it is regressive and raises many questions and does not answer any.

There are two schools of thoughts on this. One thinks that India is doomed and we just cannot do it. To support their position, they point to the budget over-runs, delivery delays and indigenisation. Under-budgeting explains both time-and-cost over-runs. The indigenisation levels are another subject. No one – but no one, in the world, makes everything indigenously. The decisive aspect is reliability of supplies during wartime. That is a matter of judgment and finances. This group’s motivations are doubtful – and they are frequently accused of acting for vested interests.

The second school paints a rosy picture – and the picture is definitely NOT rosy.

Easy Way Out?

India has been for the last 20 years the one of the top 3 armament purchasers in the world – along with China. India’ s defence purchases exceed US$10billion every year. In the next few years, India is expected to buy US$40 billion of armaments. After that kind of spending, what will India be left with – debt and aging pieces of scrap metal.

The Problem

One single issue. Poor funding.

Two thirds of domestic development budgets are taken up by wages and other set up costs. Development activity takes up only 1/3 of the budget. DRDO which is made up of academics and scientists have been a rather poor track record in getting the GOI to understand funding, costs, time frames and monetary elbow room to explore alternative development paths. What they need are good salesmen.

Frugal Engineering

Carlos Ghosn, the current chief of the Renault-Nissan combine used the term frugal engineering to describe India’s prowess in world class products at Indian costs. He followed up his talk with his walk. He has inked three deals with Mahindras for the Logan and other similar products; with Bajaj Auto for a below US$3000 car; and with Ashok Leyland for low cost commercial vehicles (in short, cheap trucks).

While other competitors had doubts about the Nano, and Osamu Suzuki and John Elliot, (is Elliot spelt like idi**) were doing a joint production of Nano comedy show, Ghosn was also (possibly) the only one who saw the threat of the Tata-Nano.

Defence Engineering

Indian defence designers and scientists have also done a similar job in defence production.

The Akash missile development project cost less than Rs.500 crores – which is about US$100 million. For that kind of money, international arms suppliers do not give the time of the day.

The 126 aircraft procurement under process is a prime example. The estimate started at US$6.5 billion. Recently it was estimated to cost US$10 billion – and the final bill may cross US$14 billion. With the right (domestic and international) partnerships (for sub assemblies like engine, avionics, airframe, tooling, etc.) and adequate and timely funding, the development cost will be US$ 2 billion. Production costs will be less than US$4 billion. (my estimates). IAF /DRDO estimates for the LCA are lower (I think that is more due to eagerness overkill) than realism.

The Arjuna battle tank development cost of less than Rs.350 crores – over a period of more than 15 years. That is less than US$100 million – over 15 years. What are we talking about? With (not so amusing) low budgets, what elbow room do those designers and scientists have to explore and develop alternatives? If they have delivered a working model, with production plan in place, it is the cheapest battle tank development in the world. With timely and adequate funding, these development cycles and design variations can be speeded up.

India plans to buy 6 numbers of C-130 Hercules transport aircraft at a cost of US$1 billion. The C-130 aircraft has now been in production from 1955, for more than 50 years (yes, for 50 years, with technology refreshments). This C-130 aircraft has now been in production for more than 50 years. A clean slate development of such an aircraft, with frugal Indian engineering, costs less than 100 million to develop. Production cost will not be more than US$200 million.

Can India continue to starve our engineers, designers and industry of funds, orders, business – and lavish spending on foreign industry. These dual standards are costing the Indian tax payers big money – and more importantly, compromising India’s defence preparedness. And the the defence forces face the prospect of fighting a war with inadequate armament and training.

Can we do it

Fortune 500 companies entrusted the biggest software problem the world had, the Y2K problem, to the Indian software industry. We had it licked in less than 3 years time. The Indian Government trusts foreign companies – but not Indians companies with defence production. How much more short sighted and regressive can they get?

The ISRO Antrix commercial space launch business is now beginning to challenge world leaders – and developed at Indian costs and world class technology.

The Brahmos collaborative development is another success story.

India needs to develop greater capability – in house, in time and based on global perspectives. This shopping around gets us the contempt (or the patronising attitude) that we deserve.

India’s Silent Revolutionaries

“Mr. Bond, they have a saying in Chicago: “Once is happenstance. Twice is coincidence. The third time it’s enemy action.” Ian Fleming, in Goldfinger.

In 60 years of post-colonial India, 3 significant developments will win the award for deepest impact – but least appreciated or known.

Potti Sreeramulu - Spirit Of The Linguistic State Reorganization (Image source - hindu.com). Click for larger image.

1953 – The Language Genie

An issue on which the colonial rulers ‘set up’ the new rulers of India for failure was on the contentious issue of language. Rightly, the colonial rulers pointed out that there never has been a successful country with so many languages.

Nehru, Subhash Chandra Bose were all for one national language – much like numerous western countries, whose success they so wanted to rival or exceed. And the language of their choice was Hindi.

What kept Europe divided, amongst many things (not that they need help), is language. Belgians (a country with 1 crore population; smaller than Chennai) are being prepared for probable split between the Flemish and the French speaking populations. Canada has been at the precipice for 100 years – torn between two languages. The Balkans , homeland of Alexander the Great (who wanted to make one world), have been at each other for the last 80 years – after they became independent of the Ottoman Empire.

There never has been a country, in modern history, which has had 2-3 languages, without splitting at the seams. One man, who is forgotten and who made a difference was Potti Sreeramulu. A believer and follower of Gandhiji, he pushed Nehru for re-organising India on linguistic lines. Nehru vacillated. Potti Sreeramulu, like Gandhiji, went on ahunger strike. Nehru ignored Potti Sreeramulu’s hunger strike. Potti Sreeramulu died.

The ground swell of international (and also domestic) opinion forced Nehru’s hand. He was left with little choice. And India has since then been administered on linguistic lines. This has given enough space for every sub-culture – without diluting their renewed Indian identity.

In the meantime, Indians have become adventurous in their integration. Idli and Dosa are a part of a Punjabi households and salwar kameez have become popular in Kerala. Hindi film industry is second only to Telugu film industry.

If India had followed colonial administration’s advice of one national language, Tamil Nadu would definitely have seceded in the 1960’s. Ask Sri Lanka. I do hope that Malaysia does not make the Sri Lankan mistake.

1991 – Problems From Outside

Rajiv Gandhi came back from Sriperumbudur in a coffin. Assam problem seemed beyond resolution. The common Indian had given up on Punjab. The 1984 anti Sikh riots only strengthened the negative outlook. Kashmir was simmering. The Indian electorate had given a fractured mandate. A hung Parliament.

Indian economy was going downhill – and nothing seemed to get the economy out of the “Hindu rate of growth”. India was on the verge of a debt default. Indian debt was downgraded by western rating agencies. The Asian Tigers had done wonders – under US tutelage. China was furiously reforming – and succeeding at it. USSR India’s faithful ally, was breaking up. Corruption was endemic and every politician was an Untouchable – nobody or anything could touch them. There were no laws. Many across the world shook their head and could be heard saying, “I knew … I told you … It had to happen …”

All bets on India were off.

A “intellectual” politician, was called back from retirement – to become Prime Minister PV Narasimha Rao. Forgotten today.

By 1995, he set up India for today’s growth. In a matter of 4 years, he cleared 40 years of cobwebs. The direction that he put India on has been now been followed for more than 15 years – with great success by more than 5 Prime Ministers. His biggest success was accountability. Heads of administration do not appear in a court of law – which PVN did. Election Commission, CAG, Supreme Court acquired fangs – earlier docile shadows of their purported design of BR Ambedkar.

1992 – The New Paradigm

One of India’s chronic under performer, Andhra Pradesh got a new Chief Minister – N. Chandra Babu Naidu. In the next 9 years, Andhra Pradesh moved in the Top 5 investment destinations.

Technology savvy, focused, driven – he changed the political idiom in India. State governments now pattern themselves along Naidu’s lines. Privatisations (instead of expanding public sector), tax cuts (instead of increases), administration automation (instead of increased recruitments), hand picked bureaucrats with a development agenda (instead of personal loyalty agenda earlier) were the cornerstones of his strategy. His state administration reform agenda convinced PM Vajpayee to commend Naidu’s template to other state governments to follow.

The Source

These 3 reformers were from Andhra Pradesh – carved out of the earlier Nizam state. The Nizam state was the largest Indian state (in Europe or any other part of Asia, it would have been a few countries) – ruled by an Indian ruler. The last Nizam of Hyderabad, considered at one time the richest man in the world, was also a very simple man. Famously, he never threw away half smoked cigarettes – frugality for world’s richest man. Especially, when other Indian Nawabs out did each other with their spending and peccadilloes in London and Paris.

Andhra Pradesh (most of) was not administered by colonials. Hyderabad is the largest modern Indian city – without a history of Colonial administration. Kolkatta, Chennai, Bangalore, Mumbai, New Delhi were cities ruled by Colonial India administration before the creation of the Indian Republic.

Indian consumer companies test market their products in Hyderabad frequently – as it lends itself to the Indian idiom. Other major metros (with a history of colonial administration) many a time give a “false positive”. Andhra Pradesh supports the world’s largest film industry – bigger than Hollywood and of course, Mumbai film industry.

Two significant creative minds were adopted by Hyderabadis as their cultural mascots. One was Allama Iqbal of “सारे जेहान से अच्छा हिंदुस्तान हमारा” “Saare Jehan Se achcha Hindustan Hamara” fame.

Chirkan, the second mascot, is the “poet” of dirty ditties. Chirkan was the irreverent break from the feudal and colonial Indian mindset – before the Indian Republic.

His rhymes on Qutub minar (a phallic symbol of feudal /colonial majesty of another era) have been repeated by every school child as his very own. He was feted at cultural events – and was a legend in his lifetime. His “sher” on a princess (the Nizam’s daughter) is repeated by schoolboys even today with raging hormones. It is to the Nizam’s credit that Chirkan was not persecuted – but given a token punishment of banishment from Hyderabad.

Forgotten today by the mainstream, Chirkan’s books still circulate in the underground. Chirkan’s rhymes and jokes spread to all of India. 75 years later, every teenager makes his rites of passage with Chirkan’s jokes. Most of Mumbai film industry’s dirty jokes are a take off on Chirkan.

Related articles

• ‘India’ (nytimes.com)