India remains dependent on military imports, which will get worse after the ‘nationalist’ Modi’s government’s policy tweak to attract foreign OEMs, who are likely to select weak Indian partners to retain control

by Gautam Navlakha

It would be churlish not to welcome, after a four-year hiatus, the recent deals signed with Russia for building two frigates at public sector-owned Goa Shipyard Ltd for $500 million, and purchase of two frigates from Russia for close to $1 billion. In addition, there is likelihood of Russia bagging the contract to supply shoulder-fired anti-aircraft missiles for $1.5 billion. The flip side of this is the fact that India remains way behind in reducing dependence on foreign countries for arms. Although, as former National Security Adviser MK Narayanan reminded fellow citizens, Russia, unlike the US, does not have anything remotely like CAATSA (Countering America’s Adversaries Through Sanctions Act) or practices sanctions to bring governments they dislike, to heel. Nonetheless, dependence on outside powers is onerous. It is an incongruity that while India can build rockets and satellites or harness atomic energy as well as manufacture nuclear-powered submarine, we are still going in for import of small arms.

Contrary to conventional wisdom, INSAS rifles developed by the Ordinance Factory Board (OFB) were used for more than two decades and obviously did well all these years only for us to be told in the era of Neo-liberalism that INSAS was worthless and symptomatic of the problem with government-owned OFBs that are simply incapable of manufacturing rifles. Newsclick has carried stories on how OFBs were left in the lurch after the prototype of the new rifle developed by them was first cleared with some modifications and then cancelled by the Army, which suddenly decided to go in for higher calibre ammunition designed to cause more damage.

However, the Narendra Modi-led Bharatiya Janata Party (BJP) government is pushing ahead with the entry of private corporations into the military sector. There are a number of ongoing tie-ups between Indian corporate oligarchs and foreign original equipment manufacturers (OEM). While the Tatas, L&T, Kirloskar etc. have been engaged in providing parts/components for a variety of military projects, there are new entrants who are making a beeline for the lucrative military sector, such as the Anil Ambani Group and the Adanis, which are saddled with debt and whose entry into the highly sensitive military sector is a cause for major concern. Besides, the OEMs are reluctant to part with their proprietary technologies. One is at a loss to understand how these developments advance India’s strategic interests?

On August 3, 2017, the US-India Business Council (USIBC), which represents 400 firms in the United States, wrote to the Ministry of Defence seeking guarantees that US firms would be allowed to retain control over sensitive technology even as junior joint venture partners. The USIBC letter said that:

[t]o allow foreign Original Equipment Manufacturers to provide the most advanced technologies the partnership arrangements between an India-owned “strategic partner” company and a foreign OEM needs to provide an opportunity for the foreign OEM to retain control over its proprietary technology.

They also opposed a clause in new rules that held foreign firms jointly responsible for the quality of platforms provided to the Indian military.

In a scenario where the government is pushing ahead with a policy to gradually dismantle the defence public sector undertakings while simultaneously expecting the public sector to “hand-hold” private entities entering the military sector, even as foreign OEMs exhibit a reluctance to let go of their control over proprietary technology, how can the country’s strategic autonomy be enhanced?

What is required instead is to bring the publicly-held military sector in line with successful public ventures, such as the Space Commission. The government should enable the type of indigenisation the Indian Navy was able to effect when it successfully designed and built Godavari Class guided missile frigates, Vikram Class offshore patrol boats (the backbone of the Coast Guard) and is now building submarines, including, nuclear-powered ones.

Sure, there are problems being faced by defence units in the public sector. But given that these have decades of head start and huge amount of public funds have been invested in them, it is wise to reform and improve these rather than run them down. It may be that the neo-liberal dogma, which has gripped the minds of opinion and policy-makers, dictates that there be no public sector, foreign or Indian, but for any political party worth its salt and loyal to India’s enduring interest in retaining its strategic autonomy, repairing the damage done to the publicly-held military sector ought to be a priority. With some ministers and serving officers and other hangers-on thrashing the public sector and wedded to profit-making and foreign OEM-controlled military sector, it appears that the ‘nationalist’ BJP government believes otherwise. The BJP government has tweaked polices to attract OEMs as no other party has done before and has gone farther in appeasing OEMs.

In the military sector, the private sector should play second fiddle to the public sector. Because if this sector is privatised, the government, as monopoly purchaser, will have to assure continued orders for the private sector so that it can profit from its investment and ensure a “reasonable” rate of return for its investors. Not only that, they can also influence, if not dictate, choices, orders and prices by using their control over the corporate media to hype up security fears and deliberately fan insecurity and propagate anxieties about the loss of jobs and retrenchment to arm-twist governments to place orders. A heightened sense of insecurity and fear-mongering is conducive for generating profits for the private weapons industry. Not only orders, but costs itself can be jacked up. Besides, whereas the public sector is audited by the Comptroller and Auditor General (CAG) of India and is accountable to Parliament, the rapidly expanding privatised military sector has no regulatory mechanism in place to ensure that public funds are not squandered or misappropriated. Consider how the BJP government has given a free hand to foreign OEMs to choose their Indian partners. As a result, the “nationalist” sounding government has given up oversight for something that has national security implications.

It’s one thing to procure weapons from Russia which has stood by India for decades, and another to get lured by the US, which has a long history of arm-twisting its allies, clients to follow its diktat. However, the larger issue is that India remains dependent on military imports. Something which will get worse were privatisation of military sector encouraged. Because OEMs will select weak Indian partners and retain control because source codes, flight control laws and ‘black box’ technologies would be controlled by the foreign OEM.

It is against this background that one has to assess the changes being brought about at a rapid pace in the military sector. As the BJP-led government gets shrill about its “nationalist” credentials, the Indian public needs to become ever more vigilant about the hollowing out of our strategic autonomy and independent foreign policy under this verbose and vacuous regime.