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BW Businessworld

Step Up To Meet New Challenges

With the new waves of technology influencing the battleground, it’s time the Indian defence establishment fine tunes its policies to suit the modern warfare tactics

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An eventful year has gone by, specially for defence, and the sector got its share of media space in 2018  what with the unending debates on the Rs 58,000-crore Rafale fighter jets deal controversy and the Defence Budget issue. To further make it worse, the Bofors issue was exhumed in 2018 and the big-ticket defence deal only turned murkier with unending debates around it in the Parliament. Against the backdrop of the depleting squadron, the government bought 36 Rafale fighter jets by cancelling the Medium Muti-Role Combat Aircraft (MMRCA) project in 2015. It happened at the cost of denying HAL the opportunity to make them in India under licence from Dassault, a French aerospace giant. To top it, diplomatic discord erupted with the US threatening COMCASA over another big-ticket purchase of air defence system S-400 Triumf from Russia by India. It was later thwarted at the ‘2+2’ ministerial dialogue’ with the US.

The IAF would be inducting its Apache and Chinooks helicopters alongside its first Rafale jets and enhanced Tejas fighters in 2019. The Indian Navy and the IAF are preparing for new inductions in 2019. The Navy would be inducting INS Karanj, a Scorpène-class submarine and three landing craft utility vehicles this year.

The Indian Navy’s  plan to build and commission its second indigenous aircraft carrier (IAC-2) into service by 2030–32 has been further postponed due to the declining budgets, technological hurdle and delays by the Ministry of Defence in approving the programme. Therefore, the Navy must pursue the development of its second aircraft carrier, ensuring it is not delayed beyond 2020. The Army again spoke about the restructuring and rightsizing the forces for the future warfare. Thus, the debate continues.



Defence is an area where straight talk is the need of the hour. Therefore, 2019 should not be just about the follow ups of transfer of technologies (ToTs) and the cacophony of ‘Make in India’ rhetoric.

What should we expect? 
The Internet of the Battle Things (IoBT)
There could not be a better way to address the monstrous Defence expenditure, time and resources spent on filling the void by just buying the ‘most advance weapon’.

In the beginning of 2018, a question was posed by BW Businessworld to the newly appointed Defence Minister, which was conveniently ignored. It was a query on the futuristic warfare based on the hardware, which  takes its cue from ‘everything on the internet or the IoBT. The modern warfare and the concept of drones, artificial intelligence (AI) and robotics are not just the ‘tools’ of warfare but a swarming reality. A research paper by the US Army Research Laboratory says, in some ways, IoBT is already becoming a reality but 20-30 years from now, it is likely to become a dominant presence in warfare. It is not to ignore the traditional infantry lined with gigantic tanks and fight generation fighter jets to keep the squadron high up in the sky. It is to realise the emerging side of modern conflicts and that is one suited to India.



In 2019, we expect things to be more optimistic. Well, if we could just align to the reality that is. The goal is not to beat around the bush but to get the act right as far as Defence is concerned.

The Draft Defence Production Policy 2018
The government had promulgated the Defence Production Policy in 2011, which aimed at achieving substantive self-reliance in the design, development and production of equipment, weapon systems, platforms required for Defence as early as possible; creating conditions conducive for private industry to play an active role in this endeavour, enhancing potential of Small and Medium Enterprises (SMEs) in indigenisation and broadening the Defence R&D base of the country. Recently, a draft Defence Production Policy 2018 was prepared and placed in public domain to provide a focused, structured and significant thrust to development of Defence design and production capabilities in the country. The Defence Production Policy 2018 has not yet been finalised.

This information was given by Defence Minister for the State Subhash Bhamre in a written reply in Rajya Sabha on 31 December 2018. Can we expect the finalisation of the draft and being implemented?

Disinvestment of DPSUs
Though the public discourse has been around Defence PSUs (DPSUs), but the matter still remains. How much water has flown over this is evident when the Indian Army Chief General Bipin Rawat said, “The media must do some more research on this subject. It is actually better that soldiers buy uniforms on their own rather than from the ordnance factories. The ordnance factory vests are so thick that no one can wear them. So, we let the jawan buy on his own, by his choice and when he wants. We are giving the access to quality clothing.”

Corporatisation was a cure-all solutions offered by various Ministry of Defence-appointed committees, headed by former revenue secretary Vijay Kelkar in 2005 to Vice Admiral Raman Puri in 2016, but never implemented by the government fearing a political fallout.

In 2018, the CAG had claimed that the OFB (Ordnance Factories Board) failed to deliver on time resulting in a shortfall in production, which accounts for 64-95 per cent of the types of ammunition in the country. Moreover, the CAG report also held the OFB accountable for the lack of supply sometimes up to a delay of 17 months.

OFB’s corporatisation will be again on the surface of any debate on the subject of disinvestment in Defence.

The rise of defence budget
Through the Departmental Promotion Committee Armed Forces would seek an enhanced budget this year, as the last budget was considered the lowest (in percentage terms) since the 1962 India-China war. Considering the year 2019 is an election year, this may prove to be a difficult proposition as there could be another year of difficult financial management.

New clear offset guideline

The Defence offset policy was formally announced for the first time in 2005 and has been revised several times. The key objectives of the Defence offset policy is to leverage the capital acquisitions to develop Indian Defence industry by fostering development of internationally competitive enterprises; augmenting capacity for research and development in Defence sector and to encourage development of synergistic sector like civil aerospace and internal security. Further avenues for discharge of offset obligations have been proposed in the ‘Draft Modifications to Defence Offset Guidelines’ released by the Ministry of Defence for public comments.

The huge import of Defence equipment – and there is little that will change – is crucial and it is an important area that needs to be addressed. The technology transfer and collaboration made under the offsets clause could be the panacea for the Indian Defence industry. The plaguing cost of R&D is hampering the private entities to ramp up to the advance level. It is a complex situation where government is required to do handholding. A clear-cut offsets policy must be at the top of the agenda for the New Year.

Investment in defence

Pursuant to the most recent amendment in 2016, FDI in the Defence sector was further liberalised to allow up to 49 per cent under the automatic route, and beyond 49 per cent  to 100 per cent under the government approval route “on a case-to-case basis, wherever it is likely to result in access to modern technology or for other reasons to be recorded”. However, this did not result in new foreign investment or attract modern technology to India, given that the FDI influx in this sector was merely $0.18 million 2014 to 2016. Though, the Defence Ministry has recently revised claimed that the total FDI was in excess of Rs 437 crore through a fresh formula that was presented in the Rajya Sabha in December 2018.

Well, whatever be the formula, there will high expectation from the government to walk the talk. Prime Minister Narendra Modi’s announcement of two Defence corridors – one in Tamil Nadu and other in Uttar Pradesh – is aimed to spur investment. Let us hope this garners enough attention.

Restructuring the armed forces
The year 2019 could prove to be a major test for the Army due to the severity of the ongoing reforms. Measures to implement changes in organisations will be concluded and amendments to its proposed structures would be near finalisation by end of 2019. It is important that this is implemented at the earliest, as the army continues to prepare for future threats with structures of the past. This would be the highlight of the Army as the necessary firepower of the colossal Indian army needs to be matched with the rising Dragon.

Joining forces
Integrated Theatre Commands is a concept for the modern military apparatus. Adopted by several countries including China, the commands would combine under a single ‘theatre commander’ elements of the Army, the Navy and the Air Force.

However, in India, there are differences of opinion regarding the ‘operationability’ within the Forces. As the Indian Air Force has pointed out, the nature of its operations are so fluid that all of India is one theatre and proposed a Joint Operations Command (JOCOM). On similar lines, during the annual Navy Week press conference at Kota House in New Delhi, Chief of Naval Staff Admiral Sunil Lanba said: “You are right, there are differences.”

It will be on the watch list as the outcome of Kargil War has given enough indication of such a ‘Joint Command’.


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