‘MAKE IN IN­DIA’ IN DE­FENCE REAL OR RHETORIC?

THE FDI LIMIT IN DE­FENCE SHOULD BE RAISED TO 100% AND ‘MOD­ERN TECH­NOL­OGY’ SHOULD BE DROPPED

The Economic Times - - Disruption: Startups & Tech -

The de­fence min­is­ter's band­width is se­verely con­strained with strate­gic, op­er­a­tional and per­son­nel mat­ters; cer­e­mo­nial func­tions and po­lit­i­cal meet­ings. De­fence pro­cure­ment should be han­dled by an in­de­pen­dent De­fence Com­mis­sion, headed by a tech­ni­cal per­son of cabi­net rank, re­port­ing di­rectly to the Prime Min­is­ter, akin to In­dia's highly suc­cess­ful Space and Atomic En­ergy Com­mis­sions. MoD be­ing the end-user can pro­vide its re­quire­ments, in­puts and/or crit­i­cism but not in­ter­fere.

The De­fence Com­mis­sion should con­nect with pri­vate sec­tor, academia, mil­i­tary vet­er­ans and talented in­di­vid­u­als and iden­tify crit­i­cal tech­nolo­gies that In­dia should be com­pletely self-re­liant in. These could be stealth sys­tems, avion­ics, propul­sion sys­tems, pre­ci­sion mu­ni­tions, UAVs and ad­vanced ma­te­ri­als etc. The rest can be im­ported. Try­ing to do ev­ery­thing is im­prac­ti­cal.

DRDO and the DPSUs needs to be pri­va­tised. Their sci­en­tists, en­gi­neers and tech­ni­cal staff would be more pro­duc­tive un­der pri­vate own­ers. They should com­pete with other pri­vate en­ti­ties for busi­ness. The bo­gey of 'Is pri­vate sec­tor trust­wor­thy?' has hurt In­dia enough and needs to be buried. The pri­vate sec­tor does not need a cer­tifi­cate of pa­tri­o­tism. There are enough checks and bal­ances to han­dle dirty fish that can ex­ist in any en­tity — pub­lic or pri­vate. There are no ma­jor DPSUs in the west­ern world and they are do­ing just fine.

In­dia's in­fa­mously long-drawn pro­cure­ment process leads to tech­nol­ogy ob­so­les­cence, higher cost and frus­trated in­vestors. It needs to be short­ened dras­ti­cally from 8-10 years to 4 years or less. MoD needs to un­der­take a Pro­cure­ment Ma­tu­rity As­sess­ment (PMA) by ex­ter­nal ex­perts. Large pro­cure­ment pro­grams in the west are han­dled by duly-qual­i­fied pri­vate con­sult­ing firms un­der the over­all su­per­vi­sion of MoD. MoD should try this out for a few medium-value con­tracts. The FDI limit in de­fence should be raised to 100% and sub­jec­tive con­di­tions like 'mod­ern tech­nol­ogy' should be dropped. MoD should se­lect 'strate­gic part­ners' for at least three large-scale pro­cure­ment pro­grams by the end of 2017, to fa­cil­i­tate long-term in­vest­ments. 'Make in In­dia' in de­fence has un­for­tu­nately not taken off, de­spite the talk. Chang­ing the sta­tus-quo re­quires a rad­i­cal shift in pro­cure­ment strat­egy, ap­proach and fund­ing. Time's run­ning out.

The au­thor is part­ner and In­dia head of Aero­space and De­fence at KPMG. As­sisted by Capt Vinod Narasimhamurthy (ex-Para SF), as­so­ci­ate direc­tor, Aero­space and De­fence, KPMG in In­dia

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