Dassault refused to partner with state run HAL to manufacture Rafale fighters under the MMRCA program because of poor infrastructure and questionable quality processing standards

The government's shifting stance has seriously affected public sector manufacturing in India and increased dependence on imports

by Gautam Navlakha

The All India Defence Employees Federation has called for a strike on March 15th, highlighting among other issues, the BJP government's assault on indigenous defence production. It has become evident that the so-called ‘Make in India’ policy for the military sector has miserably failed. India remains dependent on imports even as the government is switching from public sector-driven military production, supported by private industry, to a process dominated by foreign Original Equipment Manufacturers (OEM). The government also keeps relaxing rules for FDI in the military sector.

The dismal failure of the government is evident from the fact that whereas India has received Rs 1.17 crore ( Rs 11.7 million) so far in Foreign Direct Investment, as many as 70 procurement contracts to import military equipment approximately valued at Rs 1.25 lakh crore (Rs 1.25 trillion) have been signed.

One of the key reasons for this failure is conflicts in decision-making, where mid-way through a process, the decision is changed, with the Prime Minister's Office often wielding substantial influence. For instance, up until Manohar Parrikar was the Union Minister for Defence, the Ministry advocated single engine fighter jets to replace Mig 21 and Mig 27s. It was after a two decade-long initiative to procure a fighter jet called the Medium Multirole Range Combat Aircraft (MMRCA) that the Air Force finally settled on a single-engine jet. The procurement of the MMRCA, which was also meant to create indigenous capability through the licensed production of Rafale jets by the public sector Hindustan Aeronautics Ltd, gave way to the procurement of 36 off-the-shelf fighter jets from Dassault. This left the field free for just two contenders in the race - Lockheed Martin with its F-16, which tied up with the Tatas and SAAB with its Gripen jet, which tied up with the Adani group.

Now, in yet another shift, the Indian government has decided to start the process all over again. A Request for Information will be sought from OEMs to select a new fighter jet to replace the Migs, which will be manufactured in India by a foreign OEM, in strategic partnership with an Indian company. This could be either a single engine or a double engine jet. Since the IAF, as w

ell as the Ministry, after technical evaluation had settled on a single engine jet, opening up the field up to double engine jets means that those ruled out earlier on this ground can re-enter the competition. Thus, the entire technical evaluation process will have to be gone over again, although it may take relatively less time now since the IAF has evaluated the potential contenders in the past. Defence ministry officials told The Hindu that this phase could take two years.( “IAF to embark on a long shopping sortie for a jet”, Dinakar Peri, The Hindu March 12, 2018). However, the contract negotiations could drag on for even longer.

The issue of changing criteria and requirements appears to be the signature tune of the BJP government and has percolated down to the services. For instance, the IAF was insisting on acquiring at least 80-100 Rafale jets, in contrast to 126 jets as part of MMRCA. It then contended itself to getting 36 fighter jets by 2022 with an assurance to consider buying two or more squadrons (each comprises 18 jets) as delivery would begin in 2019. The latter deal was to have been negotiated afresh. Now, the IAF claims that because Euro 2 billion out of the Euro 7.8 billion Inter Governmental Deal for 36 Rafale jets is on account of India-specific customization, it would be economical, as well as operationally and logistically sensible, to acquire the 36 additional jets too now.

In a similar instance, the Indian Army, which had earlier decided that its standard rifle would be a 5.56 mm bore one, changed its position in April 2017 and opted for the 7.62 mm bore rifle instead The INSAS range of rifles manufactured by the Ordinance Factories were based on the original specification. Following the changing of criteria, the government claimed that the Ordinance Factory Board (OFB) could not meet the demand and decided to go in for the import of rifles, as well as their manufacture by a foreign OEM in partnership with an Indian company. Thus, the Indian Army announced it would be importing three lakh 7.62 mm assault and closer quarter carbines at an approximate cost of Rs 10,000 cr. The rest would be ‘Made in India’, sometime in the future.

In other words, no matter how hoarsely the BJP proclaims itself to be 'nationalist', its record shows it has not made an iota of contribution to building up indigenous capabilities in the military sector. With the latest move, India has to depend on foreign OEMs for even rifles, which used to be manufactured by the OFBs. This is a severe blow to the public sector in the military. Even if manufacturing does begin in India, it would be by a foreign company in partnership with an Indian corporate group.

The BJP government's 'promotion' of the defence sector is thus merely a smokescreen for augmenting dependence on imports, OEMs and foreign powers.