This document discusses lessons learned from India's pursuit of defense indigenization and self-reliance over several decades. It outlines six key lessons: 1) the vague definition of "Make in India" 2) the underperformance of state-owned defense companies 3) the challenges private companies face in entering the complex defense sector 4) limited success with foreign direct investment 5) ongoing difficulties of doing business in India 6) potential issues with newly planned defense industrial corridors. It argues a long-term, holistic plan is needed that includes industry training, public-private partnerships, clustering of firms, and earlier involvement of domestic companies in projects. The goal should be a sustainable defense industrial ecosystem.

1. Vol VIII, Issue XII, may 2018 n `100
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drdo chairman: The drive for arms exports has to come in a single voice
d e f e n c e n d i p l o m a c y n S EC U R I T Y
twenty years afterindia became a nuclear weapon power in 1998. But how potent is its
nuclear arsenal & how effective has been its nuclear strategy?

2. 44 45www.geopolitics.inMay 2018
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build on them in the future. There are
also many like this author, who believe
that no OEM would ever transfer
technology of any sort other than
partial manufacturing drawings and
process sheets. History over the last
50 years has proven the last belief to
be correct. Whether it was the Gnat or
Jaguar or MiG-21 or Su-30, we have had
to be at the mercy of the foreign OEMs
right through the lifecycles for spares
and maintenance support at huge costs.
This is proof that we Indians never learn
lessons in life.
Lesson 2 – Defence Public Sector
Undertakings (DPSUs) set up
over the last six decades certainly
served the purpose of establishing a
manufacturing base that involved huge
capital investments that was beyond
the means of the private sector of
those days. But, over the years, these
have relegated to being sleeping giants
delivering only a fraction of what they
are capable of. Worse, they are keeping
their exposure to military technologies
over decades shrouded like Egyptian
mummies. This has prevented the
assimilation of domain technologies,
however outdated they may be, by the
private sector. The result: ‘Dog in the
Manger’.
Lesson 3 - Trumpet calls to the
private sector, particularly to MSMEs
(Ministry of Micro, Small & Medium
Enterprises), to participate in defence
manufacturing, is like a Pied Piper
attracting kids, who easily fall for the
sweet music of billions of dollars of
business. Little do they realise that
aerospace and defence business can
burn a hole not just in one’s pocket, but
also in the heart and soul of a business.
It is like jumping into the deep end of a
pool with no knowledge of swimming.
Lesson 4 – Successive governments have
debated and decided differently on FDI
(Foreign Direct Investment) in defence.
The fact that just about `1.2 crores
of FDI has come in over the last four
years of the present government should
close this debate once for all. FDI by
itself provides no incentive for foreign
companies to set shop in India. On
the other hand, FDI is likely to scuttle
indigenisation efforts.
Lesson 5 – India has moved up a few
notches in the global ratings of ‘Ease
of doing business’. The moot point is
whether this is significant enough to
make a difference to local as well as
global businesses. The harsh reality
is that one still needs to hop around
between various Government agencies
for years before a new manufacturing
industry can be fully operational.
Delay in clearances are the norm, and
shortages are the order of the day,
be it power, water, effluent drainage,
transportation, skilled workers
and most importantly, competent
engineers. Perhaps, India would be in
the upper half of the table if the rating
was reversed to ‘Pain of Doing Business’.
Lesson 6 – ‘Defence Industrial Corridor’
is the latest bandwagon across the
country. When existing industries
already networked into multi-
disciplinary industrial estates are not
able to sustain, leave alone grow their
defence operations, what good can
a new corridor created along remote
highways be? Lack of infrastructure
and trained human resources are only
going to make it harsher than the harsh
reality of Indian defence business.
What’s the solution then? The
following steps are needed as part of a
holistic long term plan:
1. Implement an induction plan
for private sector industries
through an orientation training
and sensitisation programme.
This would enable non-defence
MSMEs with domain specialisation
to appreciate the stringent
requirements of the A&D sector.
They would then be able to elevate
their organisations to desired levels
and then deliver all that is expected
from them.
2. Allowtheprivatesectortoparticipate
in the MRO business at the systems
level, thus providing them an
opportunity of getting familiar
with parts, assemblies, LRUs and
systems of various platforms.
With this exposure, they would be
able to innovatively participate in
life extension solutions and then
graduate to upgraded technologies
over time. This would automatically
strengthen the indigenisation arms
of all the Armed Services.
Lesson 1 - While the present
PM’s slogan of ‘Make in India’ is
a refreshing slogan echoed effortlessly
by the rest of the establishment, nobody
seems to have the faintest idea of
what this implies. Some believe
that this is an open invitation to
foreign companies to set shop in India
and churn out products that can be
labelled ‘Made in India’, as the Su-30s
have been for the last three decades.
Some others believe that this will
necessitate technology transfer to
Indian companies so that they can
3. Facilitate the formation of Virtual
Defence Clusters. Partnerships and
collaborations between MSMEs
having complementary domain
expertise can result in the creation
of Clusters with specialization such
as Communications, Navigation,
Control systems, Hydraulics,
Weapons systems, EW systems,
Propulsion, etc. Such clusters can
grow over time to provide entry
to smaller companies as part of a
supply chain, who in turn can move
up the value chain over time. Such
clusters would serve as the sowing
fields for MSMEs to graduate from
parts and sub-systems to complete
systems for all defence platforms,
be it the Army or Navy or the Air
Force. This mechanism would
automatically also set up the Tiered
system that exists all over the
developed world. Such an ecosystem
will facilitate partnerships between
Indian and overseas OEMs that can
meet offset obligations.
4. Large private sector companies
can be the integrators of systems
provided by the MSME Clusters
with each of them providing a
competitive environment that
the Government of India would
certainly like to see in place. The
DPSUs would also leverage the
ecosystem thus created so that it
would be a win-win situation for all
stakeholders including DPSUs.
5. Don’t wait 30 years before
desperately looking for indigenous
solutions for each platform.
Encourage Indian industry to
feel, touch and handle imported
equipment as soon as they are
inducted so that indigenous
replacements are available even
for maintenance and repair in the
early lifecycle. This will eliminate
the present situation of lack
of serial production orders for
indigenous vendors after successful
development.
6. Such an ecosystem as described
above would also offer excellent
scope for the setting up of skill
training centers as relevant to
defence industries. In fact, training
centers can be integrated with
the Common Facilities Centers of
Clusters.
An integrated long term plan
as envisaged above is what would
ultimately lead to ‘Self-Reliance’ in
defence, a dream that has remained a
mirage for too long.
Lessons in the Defence Indigenisation Maze
The recent statement by a minister of the Central Government that ‘Make in India’ of defence
projects was literally a non-starter, comes as no surprise to people engaged in such business.
‘Self-Reliance’ and ‘Indigenisation’ are now better associated with seminars and conferences
across the country than with actual military hardware. For some of us associated with this
sector for the last six decades, this has remained a well known harsh reality, highlights
G Raj Narayan, MD, Radel Group
India has moved up a few notches
in the global ratings of ‘Ease of
doing business’. The moot point is
whether this is significant enough
to make a difference to local as well
as global businesses
hc tiwari
A view of the exhibitors at DefExpo
2018: Many of these exhibitors
support the ‘Make in India’
programme but are well aware of
the harsh realities on ground