A long haul, no quick fix
The government’s reported decision to press ahead with involving the private sector in defence production is welcome. It has been long overdue. However, caution is in order on expectations of cost-competitive competence straightaway. The objective must be to reap long-term gains, in terms of indigenous defence technological capability and cost savings in the medium to the long term. The Indian private sector has two disadvantages, as compared to foreign competitors. They have a captive, limited market for what they produce on orders from the Indian armed forces and are likely to be pricier, when compared with foreign arms manufacturers who enjoy economies of scale.
A prime obstacle to Indian companies acquiring scale is a poor reputation for assured quality after the initial batches, which afflicts Indian manufacturing. This calls for sustained effort to improve the integrity and credibility of Indian manufacturing exports in general, and not just in the defence industry. The second disadvantage is a poor record of research and development, honourable exceptions notwithstanding. It is possible for the government to fund and catalyse the needed R&D, by contracting out research on the lines of the Defence Advanced Research Projects Agency, which identifies product and technology requirements and bids out R&D contracts.
The resultant intellectual property can be licensed to Indian defence suppliers. A network of university departments and stand-alone laboratories in the public and the private sector, drawing top talent with pay and perks besides intellectual challenge, is essential for indigenous capability in advanced defence technologies. Of course, these things can be dispensed with, if all that the armed forces want from Indian private industry are supplies that are not critical on the battlefield. But if India wants to replicate the kind of success that tiny Israel has managed, leave alone the breakthroughs of the militaryindustrial complex of the US or Europe, the planning horizon has to be long and broad, and not confined to which company would get what kind of order.
From The Economic Times