Make In India Defense Program: Easier Said Than Done – Analysis


By C Uday Bhaskar*

The successful induction of the first two Tejas light combat aircraft (LCA) into the Indian Air Force provides the appropriate backdrop to the recent announcement of the Narendra Modi government to allow 100 percent foreign direct investment (FDI) in the defence sector.

This policy announcement is being heralded as the fillip that India’s moribund military indigenization effort needs and that very soon ‘Make in India’ will gain robust traction. However, this is an arduous path and India’s many institutional deficiencies and distinctive cultural traits may make this highly desirable goal more elusive than imagined.

The 100 percent ceiling is not very different from what the previous UPA government had also announced but the many caveats and procedural constraints ensured that the initiative was not very successful by way of attracting foreign capital.

The Tejas success which is to be commended is illustrative of the mindset that has crippled India’s indigenous defence industry for decades. The LCA program wherein India would design and build its own combat aircraft goes back to 1985 and the heady Rajiv Gandhi years. Yet, the reality is that it took 31 years for the first two aircraft to be inducted, albeit in a sub-optimal manner and it merits notice that both the engine and the primary radar are imported.

Could the Tejas have been completed sooner if the 100 percent FDI route had been adopted earlier? And the related question is – will the current 100 percent ceiling make that much needed difference ?

To get a more informed perspective, it may be useful to outline the nature of the intractable defense inventory challenge that has been staring the policy-makers in the face for decades – but the latter have chosen to do an ostrich act with renewed determination – government after government. One hopes that the Modi- (Defence Minister Manohar) Parrikar team will be able to make that difference – but the odds are stacked against them.

The LCA apart, another recent disclosure provides the context for the FDI challenge. The Indian Army, at a little under 1.2 million uniformed personnel. is the second largest in the world and it would stand to reason that the basic weapon for a soldier – a modern rifle – would be readily available.

Yet for decades on end, India has been less than successful in designing and manufacturing its own rifle – and what has been produced – the INSAS is sub-optimal and very often the adversary is better equipped! Currently the Army is reported to be short of as many as 200,000 new generation assault rifles , 160,000 carbines, 16,000 LMG-s and 3,500 sniper rifles for special operations. A scramble is on to redress this gap by looking at foreign suppliers who can also transfer technology – and help make in India.

In short, the inventory gaps are broad spectrum and range from high end platforms and ordnance to basic military requirements that includes ammunition and bullet-proof vests. Yet the Indian higher-defence pyramid was unable to ensure appropriate indigenous design and manufacturing capability even in low technology items.

Consequently India is one of the largest importers of military inventory and Moscow has been a major supplier for decades. In the current fiscal, the defense allocation is about US $ 50 billion of which upto 40 percent goes to the capital budget. Hence over the next decade, India will allocate over $ 200 billion towards acquisition and modernization of its military inventory.

Potentially this is a large allocation – over Rs 13 lakh crores (INR 13,00,000 crores) and ideally, a truly competent and nimble policy-making body would be able to prioritize the requirements and move swiftly towards attracting 100 percent FDI in select sectors. It could be the personal weapon, or a transport aircraft or an artillery gun – or even look at cyber and satellites as the new technologies to be invested in.

But the sad reality is that the Indian higher defence apex is clueless about how best to invest such a large sum of money over a decade plus with foreign participation and add tangible capacity to the military in a sustainable manner. Yes, stove-pipe wish-lists do exist – for instance a mountain strike corps, 126 fighters, more submarines et al. But what is missing is the holistic institutional integrity cum multi-ministry competence that can envisage a national systems engineering equivalent which would be capable of making an objective assessment about what India needs in its military quiver over the next four decades.

Thus the 100 percent FDI ceiling in defence, while being welcome, will have to be preceded by some very rigorous national introspection about assessing existing military inadequacies and astutely identifying sectors that need to be prioritized for the elusive ‘make in and for India objective’.

The ‘holy grail’ of indigenization can be attained only if the vast resources of the DRDO (Defence Research and Development Organization) and DPSUs (Defence Public Sector Unit) are dis-aggregated and re-cast on the lines of successful models that exist in countries like Israel or Singapore. A DRDO-centred, incremental approach will not succeed.

Modi needs to reach out to young Indians, like those who shine in Silicon Valley and Google, or those who created Aadhaar, Flipkart and Snapdeal, and mobilize them in the national cause to undertake cutting-edge defence research. The Indian diaspora is a valuable gene pool of defence related talent and commitment to enable India. It needs to be encouraged to be part of the FDI exercise.

Concurrently, train and equip the defence bureaucracy for its onerous responsibilities. With defence budgets likely to shrink, in real terms, there is not only a need for prioritizing requirements projected by the services, but also of ensuring that every rupee is spent with prudence and probity.

This calls for the urgent creation of a cadre, within the Ministry of Defence, composed of civilian and military officers formally trained in equipment selection, technology assessment, acquisition processes, contract negotiation and implementation. Such an initiative can make the critical difference.

*C Uday Bhaskar is Director, Society for Policy Studies. He can be contacted at [email protected]

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