While the embargo on defence imports is vital for the success of Atmanirbharta in Defence Production, it however cannot be at the cost defence preparedness and keeping pace with technology. Also, this quest for self-sufficiency must go beyond back slapping for reinventing low hanging fruits.

Embargo on Import

On 9 August 2020, Ministry of Defence followed up PM Narendra Modi’s call to the Nation, for AtmaNirbharBharat,  by promulgating a list of 101 items for which there would be an embargo on import beyond the timelines indicated.

Amongst the major stakeholders, the armed forces and the industry, there are two common concerns on the ‘import embargo’ list:

• One – it should not cause crucial gaps in defence capability of the Nation.
• Two – India must not miss the technology cycles as it has done in the past, leading to emergency purchase in security crisis.

The concerns come against a backdrop of heightened security challenges due to the tense situation along India’s border with China, and the competing demands on the budget, already strained by the Covid pandemic. In this article, the issue is examined from the perspectives of strategic direction, research and development, production, and procurement. In this article we specifically examine ‘embargo on import list’, why the concern? strategic direction and defence research and development.

What is the ‘Embargo on Import’ List

The Department of Military Affairs (DMA), Ministry of Defence (MoD) has issued a list of 101 items for which there would be an embargo on import beyond the given timelines.

The list has been prepared by MoD, after several rounds of consultations with all stakeholders, including Army, Navy, Air Force, DRDO, Defence Public Sector Undertakings (DPSUs), Ordnance Factory Board (OFB) and private industry, to assess current and future capabilities of the Indian industry for manufacturing various ammunition, weapons, platforms, and equipment within India.

The first timeline is effective December 2020, when 69 items will come under the import ban including artillery guns, surface to air missiles, multiple types of vessels, individual protection gear, combat aircraft and helicopter, light transport aircraft, simulation systems and others.

11 items are listed for import ban from December 2021, including new generation ammunition, mines, conventional submarines and wheeled armoured fighting vehicle, inertial navigation system for ships.

Four items are listed for import ban by December 2022. Eight items are listed for import ban by December 2024 including small jet engines, light low-level terrain radar, some ammunition, charges and fuses, and the long range – land attack cruise missile by December 2025.

The Concern

The concerns are driven mostly by past experience of the triad of Research & Development, Production, and Procurement. i.e:

• Firstly – The ability of Defence Research and Development Organisation (DRDO) to deliver by stipulated timelines.
• Secondly – The ability of India’s defence industry, dominated by the Ordnance Factories and Defence Public Sector Units (DPSU) to productionise, while maintaining cost, quality, and timeliness.
• Thirdly – The procurement set-up’s emphasis on process, rather than product or outcome.

To the triad, must be added a crucial fourth dimension – strategic direction and budgetary support.

Strategic Direction

Starting top down, as the first step, we need to have the Long-Term Integrated Perspective Plan (LTIPP) flowing out of the National Security Strategy. In his inaugural speech at the Defexpo-2020, PM Modi had announced the formulation of LTIPP for 15 years by the Chief of Defence Staff.  The ‘import embargo’ list must be seen in conjunction with specific capability requirements defined in the LTIPP.

The 15-year LTIPP of the three services, must factor budget imperatives and have concurrence of the Finance Ministry. LTIPP based on an assumed year on year increase of budget, is unrealistic and has all along been a fundamental flaw in the planning process. For the industry to be able to invest securely, the LTIPP must act like a ‘Defence Industrial Planning’ document, that comes with a degree of assurance, that items required will be procured within the given timeframe.

To minimise uncertainty in defence capability development, in 2019, the central government had added a new term of reference for the Fifteenth Finance Commission – to examine the possibility of setting up permanent non lapsable funding for India’s defence needs. According to media reports, several states have raised concerns with the 15th Finance Commission, over the Central Government’s proposal to create a non-lapsable defence fund out of the divisible pool of central taxes, pointing out that funds for defence should be allocated from the Consolidated Fund of India, as defence is the Centre’s responsibility under the Constitution.

The Defence Planning Committee, chaired by the National Security Advisor, with the Chief of Defence Staff, three service chiefs, defence, foreign and expenditure secretaries as its members, is the right forum for ensuring seamless integration between national security strategy, capability development and budgetary support.

Defence Research and Development (DRDO)

At the core of AatmaNirbharta in Defence, is Research and Development. In India, the nucleus for this, is the DRDO. Their successful projects include the LCA Tejas, Akash Weapon Air Defence System, Strategic Missile Systems – Agni and Prithvi, Pinaka, Weapon Locating Radar, EW Systems, Sonar, and underwater systems, and more. Recently DRDO has demonstrated capability in Anti-Satellite Weapon Systems (ASAT) and hypersonic technology. Yet there are many projects in small arms, ammunition, and such basic requirements of military technology that are unsuccessful, unduly delayed, or irrelevant.

The ‘import embargo’ includes several systems which are at various stages of development by DRDO. In some cases, even the industry partners are yet to be identified. With the strict timelines stipulated for application of ‘import embargo’, there can be no scope for diffused accountability. It requires defining clear cut responsibility for each key functionary by name and designation.

DRDO has followed up the ‘import embargo’ list of MoD, with a list of 108 systems and components, to be passed on to the industry for design and development. This is purportedly to allow the DRDO “to focus on design and development of critical and advanced technologies and systems.” It is a potentially good move, provided DRDO undertakes policy and structural reforms to focus on core technologies of strategic importance.

An expert committee has been convened to study and review the charter of duties of all 52 laboratories of DRDO, to redefine the same, for both current and futuristic defence and battlefield scenarios. The committee will also look into minimising overlap of technologies amongst the laboratories. In 2008, a committee headed by P Rama Rao, former Secretary, Department of Science and Technology, had submitted their report after examining similar issues, but its recommendations remain only partially implemented.

Over the years DRDO has over stretched itself with 52 labs trying to cover the entire gamut from ASAT, Hypersonic Weapons to Psychological and Food Research. Study of the number of DRDO products introduced into the Army, Navy and Air Force provides a fair indication of the relevance and contribution of so many labs. Likewise, the protraction of projects year after year without outcomes, also indicate the futility of persistence without fresh ideas.

In 2016, after periodic review of DRDO projects and some lab visits, the author had undertaken an exercise to focus research on Directed Energy Weapons, to meet specific operational requirements, relevant to India’s threat perception and terrain. Amongst the issues that came to light were absence of operational guidance and overlapping projects in different labs. With collaboration of all stakeholders, a competent Army officer was posted at the leading lab, yielding positive results. Attempt was also made to minimise overlap, but in the absence of structured user oversight, such initiatives did not endure long enough.

User guidance for DRDO projects is almost absent. Most army officers posted to DRDO, are on administrative assignments. Occasional lab visits by services officers from the headquarters and periodic review meetings are not adequate to provide the intimate guidance that is required. This point comes out clearly when we see distinctively good achievement of a DRDO lab located close to one of the Army Training Establishment.

DRDO has been offering transfer of technology (ToT) for both military technology (Category A) and dual use/commercial technology (Category B) to the industry. Cursory review of the list of technologies transferred so far, shows much higher industry preference for dual use/commercial technologies. This is well understood from the point of view of industry, and their logic of commercial viability.

But that should give no great joy to MoD or DRDO, since such ToT neither meets the requirement of the armed forces, nor is it justified from MoD’s return on investment, be it in terms of project cost, manpower and administrative cost etc, considering the limited allocations for defence R&D, as given in the table below:

The list of 108 systems and subsystems offered recently for the industry for design, development, and manufacture, mostly comprises Military Technology (Category A). Keeping in mind DRDO’s ToT experience, some incentives must be offered for industry to take over these essentially military systems and subsystems:

• First, an assurance of orders extending over 10-15 years, subject to meeting cost, quality, and timelines.
• Second, to make it attractive enough for the small and micro industries, creation of a CAPEX fund to provide impetus to SMEs to invest and expand their capacities, must be considered.

The CAPEX fund should provide for a low interest, long term loan for SMEs to be used only for capital expansion and capacity enhancement. The key should be to use these funds not for working capital, but actual expansion of capacity. The increased capacity will have a multiplier effect in terms of increasing the jobs in these manufacturing units, and also in bringing down the final price of the items manufactured, as economies of scale come into play.

For good reasons, the DRDO has taken this decision to pass on the development of these 108 systems and subsystems to the industry. It is limiting its involvement to providing scientific/technological, and testing support only. To be sure that the outcome meets the requirements of the three services, it is imperative that these 108 systems and subsystems, come within the purview of the integrated project management teams (IPMT), comprising services officers, DRDO, finance and acquisition.

The future of warfare is rapidly moving towards AI, Cyber, High Energy Weapons, Hypersonic Weapon Systems, IOT, Quantum Technology, Machine Learning, Nanotechnology, Robotics, Unmanned Systems, and Space. The armed forces and DRDO have to jointly make a distinction between ‘core technology projects of strategic importance’ for the future, and projects meant to meet ‘specific operational requirements.’

While DRDO should focus on core technologies of strategic importance, all the other requirements should be passed on to the IPMT led by defence service officers, who would be responsible for the design, development and production, with authority to decide industry partners, and financial powers delegated for design and development.

The author is a Member, of National Security Advisory Board, former Deputy Chief of Army Staff and Kashmir Corps Commander. Views expressed are personal.