In Defence of foreign tie-ups

Besides spectacular displays of global air power, the recent Aero-India Show in Bangalore also brought to light a significant fact about Indo-US collaboration in Defence research, which was hitherto virtually nonexistent.

The statement by the Defence Research and Development Organisation (DRDO) Secretary, Dr V.K. Saraswat, that nearly 30 of the organisation's high-tech projects involved US co-operation assumes significance in the backdrop of the longstanding strain between the two nations in this sector.

Interestingly, when the US President, Mr Barack Obama, visited India last November, he did press for high-tech cooperation in strategic areas. Moreover, the US finally removed select Indian space and defence entities from the banned technology import list. More recently, the US Commerce Secretary, Mr Gary Locke, arrived with a large team of 24 companies for discussions.

Traditionally, the Indian Defence research establishment, like its nuclear cousin, has been heavily dependent on the erstwhile Soviet Union for technology and joint projects. With the break-up of the Soviet Union, the focus shifted considerably to indigenisation, although Russia continues to be a reliable partner.

The DRDO Chief also broadly indicated that the areas of ongoing co-operation with the US included manufacturing, materials, communication systems and low-intensity conflict areas. Interestingly, Dr Saraswat has been a strong votary of indigenous development of critical materials. But his recent remarks reflect a pragmatic approach for joint development with willing international partners.

New Defence production policy

In the past few years, besides Russia, there have been other joint technology development efforts, especially with France and Israel, thanks to the new Defence production policy, with its ‘offset' clause.

A case in point is the proposed joint venture involving the DRDO, the Indian Air Force and Israel's Rafael and Israel Aerospace Industries (IAI)to develop medium-range surface-to-air missiles (MRSAMs). At about Rs 10,000 crore, the deal has been billed one of the biggest defence JV projects with a foreign country.

The Indo-Russian joint project Brahmos has been a success in joint collaboration and development, with the Brahmos supersonic missile (290 km range) being developed and delivered within a few years. Even the naval version of the tactical missile has undergone successful trials. That technology cooperation with the US is important is also clear from the ambitious investments and mega projects that the Defence Ministry has embarked upon. The ASTRA beyond visual-range missile, AD (air defence) and sensitive communication projects will firmly establish a reliable and strong command, control, communication and intelligence system. International co-operation can clearly save time in getting these programmes in place.

Braving the denial regime

For decades, India has been subjected to the denial regime called MTCR (Missile Technology Control Regime) that bans receiving dual-use items, particularly from the US. Defence experts say this has caused major delays in projects such as the LCA (Light Combat Aircraft), Arjun Tank and the IGMDP (Integrated Guided Missile Development Project).

Work on the IGMDP had started in 1982-83, while the Arjun Tank and LCA programmes are also over 25 years old. The 1998 Pokhran nuclear blasts brought on a spate of US actions banning the export of dual-use technologies as well as putting more than 100 entities in the three strategic sectors on the ban list. Consequently, the DRDO had to fall back on the support of more than 500 Indian industries, large ones and SMEs, which took up technology development and indigenisation projects. This has led to successes in missiles such as Agni, Prithvi and Akash, the Arjun Tank, and the LCA to an extent.

While there is pride in indigenous development, access to critical technology, components or joint development with advanced countries would have accelerated these projects, as well as led to the development of new projects for strengthening the country's defences.

The Defence Production Policy, which stresses the ‘offset clause' stipulating that any multinational company bagging a Defence project should source at least 30 per cent of the project cost from within the country, has in a way provided stimulus for the domestic industry to enter this strategic sector. While big players such as the Tatas, Godrej, L&T, HAL, ECIL, BEL, Hindujas, Infotech Enterprises and Mahindra and Mahindra are rapidly expanding capabilities and forging tie-ups with global players, the SME sector is also active in its own way.

Wooing the private sector

For the aerospace park coming up on the outskirts of Hyderabad, several SMEs in and around the city have come together to create common facilities and financial muscle to be able to bid and compete for the projects against big players. One of the major factors holding back the Indian private sector from venturing further into the Defence sector is the uncertainty over orders and financial viability. With no scope to enter the global markets, the industry did not consider it profitable. While the opening up of the Defence sector for FDI up to 26 per cent, and the move to allow global collaboration as well as multi-million dollar projects, as part of the Kelkar Committee recommendations, are positive signals, a serious effort is needed to win over the participation of the domestic industry. Cooperation with countries such as the US, Russia, Israel, France and the UK could prove beneficial for the DRDO in the long run.

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