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View: India must tap private sector for closing tech gap with global military powers

Defence production and R&D will not make the desired leap unless MoD proactively supports the private sector in manufacturing and R&D, and revamps the DRDO. It is time the MoD tapped the entrepreneurial energies of the private sector to bridge the...

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Nov 20, 2019, 10.01 AM IST
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Domestic defence manufacturing has to survive in a monopsony. MoD must tap the private sector to bridge the technological gap between India and the advanced military powers.
BY G MOHAN KUMAR

The appointment of a chief of defence staff (CDS) in the Ministry of Defence (MoD) is bound to energise decision-making as defence planning will get rationalised through an objective evaluation of demands put forth by the services for modernisation. Under the leadership of the CDS, the long-term integrated perspective plans, the mainstay of the modernisation programme of the services, have a great opportunity to take off in the right direction. But the plans will fail if India continues to rely heavily on imports without indigenous production of major equipment such as fighter aircraft, helicopters and submarines backed by robust research and development.

The recent speech by the defence minister calling upon the Defence Research and Development Organisation (DRDO) to concentrate on high-end, futuristic areas of technology is a pointer to the infirmities of our defence R&D. Defence production and R&D will not make the desired leap unless MoD proactively supports the private sector in manufacturing and R&D, and revamps the DRDO.

Domestic defence manufacturing has to survive in a monopsony (government is the sole buyer). This necessitates specialisation and longterm commitment to investment in product development and maintenance. The strategic partnership (SP) policy was incorporated in the defence procurement procedure to harness the latent capabilities of the private sector for production of major equipment by nurturing a sophisticated ecosystem of small and medium component manufacturers.

In advanced countries, defence production is dominated by a small group of private companies backed by a plethora of small firms. They have longterm partnerships with their governments in both R&D and production. The governments exercise strong regulatory control over their activities in both manufacturing and export. But a monopolistic private sector is unthinkable in our country, which has given constitutional protection to public sector monopoly. Article 19(6)ii provides for restricting fundamental rights in favour of the public sector. This could perhaps be extended to the private sector also by legitimising monopolies in strategic areas like defence in larger national interest.

It is time the MoD tapped the entrepreneurial energies of the private sector to bridge the technological gap between India and the advanced military powers. Some years ago an expert committee had recommended a system of recognising competent private firms as ‘udyog ratnas’ to be treated on a par with the public sector. Later the Atre committee, which laid the foundation for the SP policy, strongly recommended selection of private firms for long-term partnerships and contracts on the basis of costplus pricing. This met with stiff resistance both at the bureaucratic and political levels and the SP policy was framed after substantially watering down the original recommendations.

The elemental fear of the trinity comprising the CVC, CBI and CAG once again put paid to a highly ambitious reform effort. After the unseemly political spat over the offsets of the Rafale deal, the RFI (Request for Information) for the single-engine fighter project was recalled and revised in a kneejerk fashion to allow the public sector also to compete. With the HAL struggling to honour the deadlines for delivery of Tejas – for which it has a good order from the MoD – its capability to deliver another single-engine aircraft within the stipulated time is questionable. So much for progressive policymaking – often starting with a bang and ending in a whimper. The imperatives of national security are overridden by incurable conservatism.

The defence minister’s exhortation to the DRDO raises questions on the trajectory of defence R&D. With China challenging the USA in contemporary technologies such as the 5G, artificial intelligence, fifth generation fighter aircraft and electronic warfare, do we have the resolve to narrow the technology gaps?

We have to reflect deeply on defence R&D being a monopoly of the DRDO. While the DRDO has done excellent work in some advanced areas, its unfocused organic growth in all directions has rendered it unwieldy. India has made little headway in developing high-tech materials like high grade alloys for use in defence equipment. Unless we achieve a breakthrough in this field, development of aero-engines and other high performance equipment will remain a pipe dream.

Advanced countries have successfully harnessed the energies of the private sector for R&D. The most wellknown example is the Defence Advanced Research Projects Agency (DARPA) of the US Department of Defence which created a transformational innovation ecosystem in partnership with the private sector with regulatory control over Intellectual Property Rights (IPR)and export.

In India, when a private company develops products even for the DRDO, there is no system to guarantee orders to the developer to make manufacturing commercially viable. A conscious effort is needed to downsize the DRDO and earmark substantial funds to involve the private sector in R&D with clear demarcation of the rights and responsibilities. While the DRDO could handle areas such as strategic systems and missile technology, it has to be a facilitator for research in other areas through public-private partnership with the active oversight of the three services. There is a need to enact a legislation to facilitate such partnerships and to safeguard IPR and national interests. The DRDO needs to have the flexibility to hire worldclass talent. The final answer may lie in the DRDO being converted into an autonomous research foundation, overseen by an independent board of distinguished scientists and senior members of the three services.

(The writer is a former defence secretary)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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