Tuesday, July 04, 2017
From making arms to selling them
India has to move towards arms exports to sustain a viable domestic defense production sector
It is quite a relief to hear the sober assessment of Defence Minister Arun Jaitley saying that “defence preparedness” is the best way to ensure stability, and that no country can continue to win wars and battles by importing arms, which is in contrast to the maverick pronouncements of his predecessor, IIT-educated Manohar Parrikar, who has now gone back to his home state of Goa as chief minister, the place and position he came from. Jaitley made the remarks while giving away the Defense Minister’s awards for excellence to Defense Public Sector Undertakings (DPSUs) at New Delhi on Tuesday (May 30, 2017).
The crux of the new thinking on turning India into a hub of arms manufacture is however quite ambiguous. It is stated that it will be a joint venture between Indian and foreign manufacturers of fighter planes, helicopters, armoured vehicles including tanks, war-ships and submarines.
There is the realistic assessment that India is not yet in a position to become an indigenous arms manufacturing hub, and that there is the embarrassing need for foreign collaboration. Of course, the logic is that in course of time, Indian arms manufacturers should be able to shake off the foreign collaboration and become wholly indigenous. But this premise may not prove to be too promising because foreign armament manufacturers would be thinking ahead too, and they would not want to become redundant in the future. What it would mean is that the foreign arms companies would not share their state-of-art technologies with India.
The alternative would be for India to think in terms of becoming a manufacturing hub for armaments on a multi-national corporation (MNC) basis, where the business strategy would be to become arms exporter. As a matter of fact, this is indeed the unstated vision of many among the security as well as business strategists in the game. It would be simplistic to believe that it is enough if India learns to make armaments for its defence needs. So India needs to think in terms of being an arms exporter if it wants to have a sustainable arms manufacturing base.
There are many examples around the world where the ability to be a competitor in the global arms bazaar is seen as a sign of national prowess. The carping critics of United States’ global cop role argue that the Americans thrive on conflict zones across the world which would help boost the sales of arms they manufacture. There is also the searing critique that the day Americans cannot sell their guns then their economy would collapse. Indirectly, Americans, and the capitalist economy in general, is portrayed as merchants of death.
So, there is a moral dilemma to the whole question which should not be shirked. There might arise a need to construct a rhetoric that the arms exports will only be meant for self-defense of the countries that are buying them from us, and there might have to be clauses restricting re-export as is done by the United States when it sells armaments to Israel and other countries. Most gung-ho strategy experts in the country might scoff at the idea that there is any need to offer a moral defence for the export of arms.
But India has not yet reached the commanding position of arms exports. According to Ministry of Defence (MoD) figures, India’s expenditure on capital procurement from foreign vendors stands at rs 22, 422 crore in 2015-16, which has declined from Rs 35.082 crore in 2013-14 to Rs 24,992 crore in 2014-15. The comparative figures for defence exports are Rs 1,050 crore in 2013-14, Rs 1,682 crore in 2014-15 and Rs 2,014 crore in 2015-16. There is a huge gap between defence imports and exports. It can be said that moral dilemmas of arms exports can be deferred for the moment.
There is however a red herring in the way. There has been talk, even intense lobbying, and justifiably so, that the Indian private sector should become a major player in defense production. And there is the implied criticism that it is the government monopoly that had arrested the growth of the private sector participation in defense production. The reason as to why defense production in India remained with the DPSUs is a historical one. At the time of Independence, the Indian private sector was too weak to even take up the burden of meeting the economic challenges of the country. As a matter of fact, it is the captains of industry who had vigorously argued for the active role of the state in the economy. It is only in the 1990s, it seemed possible to wean the Indian private sector away from protectionism and expose it to global competition.
Secondly, the Indian private sector cannot hope to be at the forefront of research and development in weaponry. The Indian private sector generally has been in the habit of buying off new stuff off the shelf as it were in the global marts. The same logic cannot be easily extended to defense production. There is of course the example of the Boeing-Tata joint venture in Hyderabad which is tasked with producing Apache helicopter fuselages. But Boeing has an enviable R&D in place, which is not the case with the Tatas or with any other Indian private sector conglomeration.
It has also to be noted that even in the United States, the ostensible free market paradise, weapons and other frontier scientific research is done at government-funded laboratories as well as at the universities. India’s R&D spend will have to increase if the country wants to meet its own defense needs as well as hope to increase its footprint in the international arms market.
Therefore, it would be simplistic and even foolhardy to dismiss government-funding of R&D, especially in weapons systems as well as in basic science. India’s strategy experts who want to strut about as pragmatists do not recognise the umbilical cord that connects basic science research with technological spin-offs in the defense industry. There is then need for sensible debate on the issue of arms manufacturing and arms exports in this country. And it has to avoid the extremes of moral squeamishness on the one hand, and cynical swagger on the other.
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