It is unclear if he meant that 85 percent of the equipment bought by the IA was indigenously designed and developed, or this is the percentage of IA’s total procurement budget that was paid to Indian companies for the materiel sourced from them.
By Amit Cowshish
Speaking at the inaugural session of ‘Ahmedabad Design Week 3.0’ at Karnavati University in Ahmedabad on February 26, Chief of Army Staff (COAS) General MM Naravane said 85 percent of whatever the Indian Army (IA) buys is ‘Indian’.
It is unclear if he meant that 85 percent of the equipment bought by the IA was indigenously designed and developed, or this is the percentage of IA’s total procurement budget that was paid to Indian companies for the materiel sourced from them. Most probably, what he meant to say was the latter, in which case it is no big deal as this is in keeping with the past trend.
According to a March 2021 report of the Standing Committee on Defence, the decadal average of payments made to the Indian companies between 2010-11 and 2019-20 was 79.26 per cent of the total capital expenditure on procurement. In fact, payment made to the Indian companies was more than 90 per cent of the total capital spent on acquisitions in each of the three years from 2010-11 to 2012-13.
Furthermore, the entire payment made to the Indian companies does not stay with them. Many products made in India Are either license-built or require imported material and components, for which payments are made by the Indian companies to overseas suppliers in foreign currency. But since the local companies are paid in Indian rupee by the IA and other services, the entire payment made to them is presented as evidence of increasing levels of indigenisation.
Seen in this perspective, the fact that 85 percent of the purchases made by the IA were ‘Indian’ does not imply that the materiel was locally designed and developed, which is what matters from the point of view of achieving self-reliance in defence.Consequently, the quantum of payment made by MoD to Indian companies cannot be an appropriate yardstick for assessing the extent of Atmanirbharta, or self-reliance, in defence production.
Self-reliance is a function of the Indian industry’ capability to design, develop, manufacture, and integrate major weapon systems, assorted equipment, and platforms needed by the Indian armed forces, without having to rely on import of raw material, components, and, most importantly, critical technologies required for manufacturing them.
Substantial investment is required in defence R&D (research and development) for development of critical technologies which, if denied by the foreign suppliers because of sanctions or any other reason, could cripple local production, or seriously impact operational serviceability of the equipment in use by the services.
Defence R&D has largely been the preserve of the Defence Research and Development Organisation (DRDO). Many of its programmes, like the Integrated Missile Development Programme, have been quite successful, but many others are delayed or have all but failed. According to a 2015 report of the Comptroller and Auditor General, 14 of DRDO’s mission-mode projects were running behind schedule. It is also no secret that DRDO has been anxious to acquire, rather than develop on its own, several critical technologies through the defence offset route but has not succeeded so far.
In the circumstances, the announcement made by Finance Minister Nirmala Sitharaman while presenting the union budget for FY23 that 25 per cent of defence R&D budget will be earmarked for the Indian Industry, start-ups, and academia, is a welcome step. But its efficacy would depend on the policy and procedural framework evolved to spend the earmarked funds. Sadly, empirical evidence does not inspire much confidence.
Setting aside funds for a specific purpose and fixing expenditure targets diverts the attention of the budget holders from achieving the intended outcomes to ensuring that the available funds are fully utilised within the financial year one way or the other.This approach needs to be abandoned in favour of utilising the funds on projects which make India truly self-reliant in defence production.
General Naravane also told the audience at the inaugural session in Ahmedabad that IA was looking for development of indigenous infantry combat vehicle (ICV), armoured personnel carrier, and cheaper solution for providing water and power to forward areas. “We need a design change. Can we think of something radically different which is unique to us?”, he added.
Surely, these are only a few examples of IA’s priority, but they also exemplify the insouciant approach that underlies the disjointed indigenisation efforts made over the years. Take, for instance, the ICV project. In the last fifteen years, Expression of Interest was sought twice by the MoD from the Indian industry for developing a prototype of a Futuristic Infantry Combat Vehicle (FICV), but on both occasions the project got stalled even before the developmental contract could be awarded.
In a fresh attempt in June last year, MoD issued Request for Information to 12 Indian companies for 1,700 Future Ready Combat Vehicles (FRCV). Nine months later, the project is still under consideration. As for finding cheaper solutions for providing water and power to forward areas, it is surprising that such fundamental needs have remained unattended so far despite several schemes available to promote such projects.
In the meantime, of Rs 327.70 crore allocated to IA between FY18 and FY22 for providing assistance to the industry for technology/prototype development, only Rs 35.50 crore, or 10.85% of the total allocation, could be utilised. It is high time IA improved its internal procedures so that Rs 100 crore allocated for FY23 gets utilised so that at least the troops in the forward areas could get easier access to water and power.
(The author is Former Financial Advisor (Acquisition), Ministry of Defence. Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited).
