If India is really serious about reducing its dependence on foreign sources for its defense needs, this is the time to act.
The Medium Multi-Role Combat Aircraftselection process is nearing its end. The tenders were scheduled to be opened early this month, with the lowest bid to be compared with the notional figure that the Indian government calculates on the basis of prevailing prices of the same or similar equipment. But problems could arise if the difference between the two is large, which could prompt further delays.
The MMRCA contract is extremely important because the offset clause obliges the vendor to spend up to 50 percent of the contract value in India – a huge amount. But to derive the maximum benefit from this, Indian industry must be in a position to absorb such major technological infusions. This is unlikely to happen if the government focuses only on public sector undertakings like HAL, and ignores the numerous small and large players in the private sector.
The current climate is especially propitious because many aviation and other defense industry majors in Europe and the United States are facing a bleak future. The fears of a second economic meltdown are widespread, and the Eurozone crisis is showing no signs of securing a lasting solution. There seems, then, a real opportunity to strike deals that could finally help the indigenization of India’s defense industry.
The U.S. government is likely to make deep cuts to its defense budget. The F-22 stealth fighter program and now the F-35 program are afflicted not only by their own development problems, but also budgetary cuts. The U.S. offer of the F-35 to India is a reflection of the present economic difficulties facing the United States, and it’s likely therefore that the earlier restrictions on transfers of technology could be greatly loosened.
Following the Strategic Defense and Security Review (SDSR) of October 2010, Britain announced deep cuts in its defense spending, although these were termed as inadequate by the Comprehensive Spending Review that came a few months later. Ultimately, Britain plans to cut its defense spending by a whopping 10 percent over the next decade, with some two billion pounds already saved this year. The process began in December 2010 with the early phasing out of the 63-strong Harrier GR9 jump-jet fleet – the pride of the Royal Navy. The Nimrod MRA 4 fleet, which had played a crucial role in maritime surveillance and airborne SIGINT duties for over forty years, was the next to see retirement. Its replacement, the U.S. KC-135 Rivet Joint, has been put off until 2015. The Royal Navy also had to decommission an aircraft carrier, the HMS Arc Royal. HMS Illustrious, the other carrier, is also due to be decommissioned in 2014.
Estimated redundancies or employment losses are likely to reach 25,000 civilian/industry and 17,000 military. Considering that each of them is a specialist and skilled worker in his or her own way, all this could have a debilitating effect on British industry. The Royal Air Force is also allowed a fleet of only 107 Eurofighter Typhoons instead of the much higher figure that was sanctioned originally. Germany, for its part, has also announced plans to cut its Bundeswehr or Federal Defense Forces strength from 220,000 to 185,000.
India is thus in an enviable position, with its economy doing well enough to continue to commit a sizeable amount to defense purchases.
It’s perhaps time for Indian companies like Tata, L&T and Mahindra Defense and indeed the Indian government, to invest in U.S. and European defense companies. General Atomics, the manufacturer of the RQ-1 Predator and RQ-9 Reaper, Honeywell, EADS, BAe and many other such names come to mind. Other countries might well welcome even relatively small investments. Such forays will also open vital contacts with these industries and facilitate transfers of technology and joint ventures.
Remember that China has been under a NATO arms sales ban since 1989, and many European countries, especially France, are strongly advocating that it be lifted. If the European economy shows signs of a further slowdown, China would be in a better position to exploit emerging opportunities.
Also, in the early 1990s the Chinese leadership immediately grabbed the opportunity to get a cash-strapped Russia into parting with the Su-27 and other technologies that were then considered out of reach. China also managed to get some 400 to 500 jobless Russian engineers to work in China on different projects.
The Indian government must be prepared to invest a sizeable sum, say $500 million each, in four or five of these companies whose products India needs. This could include UAV’s, aero-engines, multipurpose short range missiles like the Griffin and Javelin, and weapon systems including PGMs that can in due course be produced in India.
India has already spent large amounts on big ticket items like the C-17, Hercules C-130J, PC-22 trainers, the Mirage-2000 upgrade and a variety of helicopters and surface-to-air missiles, but it’s time to cast the net wider and take some bold steps to kick-start the indigenization process and also obtain what the Indian military needs.
It’s true that for any country to become an autonomous power center, it must, among other things, possess a strong strategic defense industrial base. This is one area where India should closely follow Chinese practices. Our leaders have been repeatedly stating that India’s dependence on foreign sources for 70 percent of its defense needs is both shameful and dangerous, and yet we’ve made little progress on the ground. As a result, vital opportunities are quickly slipping by. India must take advantage of new opportunities to gain experience and technology from eager partners. If India fully realized such a vision, it may one day sport an indigenous defense industry that is world class and self-sufficient.
Air Cmde (Retd) Ramesh Phadke was Advisor, Research at the Institute for Defence Studies and Anaysis (www.idsa.in) in New Delhi. This is an edited and abridged version of an article that was originally published by the organization here.