Thursday, February 21, 2013

Defence Budget and Defence Production in India

India’s Defence Minister, Mr AK Antony, was reported today as saying at a seminar that we should speed up indigenization of defence production to root out corruption in defence purchases.
India had decided in 1954 to keep out the (Indian) private sector from defence production. It was expected that units under the govt would produce a lot and the rest could be imported. What is the reality today? A govt webpage
gives some indication of India’s defence production. The latest available figures on this page are the targets for 2002-2003: Rs 15,767.27 Crores. Compare this with the defence budget as reported in
That site reports that day-to-day costs and salaries were budgeted at Rs 1,13,829 crore for the year 2012-2013.  Compare this with the provision for new weapons, sensors and platforms at Rs 79,579 crore, again for 2012-2013.  So, Indian production covers approximately 20% of the needs for defence equipment! Even if there has been a dramatic increase in defence production since 2002-2003, India’s current need for huge imports of advanced defence equipment is well-known. 

Now, let us come to Mr Antony’s solution to corruption in defence purchases. Given the past performance of govt units and public sector units, it is clear that the Indian private sector would have to play a role in future defence production. Given that, does Mr Antony believe that there would be much less corruption in defence purchases? He should perhaps consult the Minister for Telecom about it! Indian companies may need foreign know-how for producing some types of advanced defence equipment. However, they would surely not require any foreign know-how to oil the wheels of govt purchases with the right lubricant!
Am I arguing against Mr Antony’s support for indigenization of Indian defence production? No! This is important for another reason: jobs!  Unless we trust that Indians can design, develop, build and maintain a good fraction of defence equipment we need, we would continue to export millions of economically significant jobs! Not indigenizing defence production in a big way would be disastrous economic policy!

Now, let us come back to the issue of corruption in defence deals. Fighting this is no less important than creating millions of jobs. But I believe that this has to be handled differently. Our soft state does not treat corruption in defence purchases as treason, as far as I know. Such treason is no less of a grave offence than betrayal on the battle field. There is only one punishment appropriate to this offence! Sure punishment for such treason will quickly reduce corruption in defence purchases.

There is another issue: how does the govt select top military leaders? Does it give due weight to those offices who have shown their ability to manage defence production, to promote R & D, and support innovation? A technological world calls for leaders who can deal with technical issues.  

Srinivasan Ramani
February 21. 2013  

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