Defense: Audacity of Illusion

July 18, 2015

by Gautam Navlakha

Every time a ruling party and a has-been-ruling party spar and pour scorn on each other over matters related to defense it helps public to get a glimpse into the inner workings of India’s defense planning and strategic thinking. Combination of ‘need to know’ regime, serving of b sanitized pellets of information underpinned with adequate amount of fear mongering, contribute to paucity of knowledge. If such sparring results in cutting flab or scale down military ambition, it would be welcomed. However, when decisions are taken summarily, overturning approved plans and program, without clarifying or addressing underlying assumptions behind the plan and program, then there is bound to be reasons for concern. Anxiety mounts when it is reported that main stakeholders were not even consulted before announcing the major shift, which affected them adversely. Those being listened to, instead, are foreign military corporate behemoths, pushing for military supplies and dangling lucrative investments in the military sector.

A recent statement released by the Ministry of Industry and Commerce announcing the withdrawal of critical preference given to defense PSUs in form of excise and custom duty, asserts that this was meant to provide “a level playing field….by taking away the strategic advantage with PSUs for quoting lower rates in open bids”. (1) This has been a key demand of foreign manufacturers, the so called ‘Original Equipment Manufacturers’ (OEM) and their Indian partners, as the Ministry of Industry and Commerce officials acknowledged by stating that the Government had “fulfilled demand of foreign Original Equipment Manufacturers such as Boeing, Airbus, Lockheed Martin, BAE System….”. (2) Union Minister for Defense, Manohar Parrikar, had opined that “India’s demand for defense equipment is too large for anyone to ignore. They (multinationals) will come and setup their businesses here in joint venture under the Make in India campaign for defense production…Once they are here Indian companies can get maintenance and spare parts business.” (3) While India could be an attractive a destination, question is should DPSUs be harmed and foreign investors favoured? Senior officials of Defense Public Sector Units (DPSU) told Indian Express that they were not “consulted” and that duty hike will push up domestic cost of defense goods being manufactured in India. One senior officer told the Indian Express that it is actually the “DPSUs that need to be given level playing field…and not the other way round”. (4) Indeed why should profit driven foreign OEM’s or private sector investment be preferred over non-profit driven and cost effective production by DPSUs? If the DPSUs have failed to deliver, as is claimed, why is it that why are they not being restored to health instead of being harmed?

This push for defense manufacturing by encouraging OEM to set up manufacturing hub in India is made out to be a pragmatic approach, to get around the shortcoming of defense PSUs, but it is fraught with economic and strategic costs, which do not appear to have been taken into account. From the ministers own remark it is apparent that India’s private sector is seen as playing second fiddle to OEM. Thus, the stranglehold of foreign defense manufacturers over India’s military needs, will tighten as they are loath to part with source codes or critical areas of technology related to war equipments. Keeping in mind the corrupting influence of military-industrial complex in US polity or the clout of military apparatus in illiberal States, to put it mildly, how does the Narendra Modi Government intend to cocoon the military sector and defense planning from getting corrupted? If self-reliance in the military sector is a strategic imperative and it is considered to be an intrinsic part of country’s geo-strategy, then why is it that the reform of DPSUs and restoring it to good health not been prioritized over everything else? That DPSUs have problems is no brainer. But they have also achievements to their credit.The updated Bofors artillery gun manufactured under ToT and now re-named Dhanush is one such product. Thus a glaring absence of a reasoned and balanced assessment of DPSUs is quite striking in corporate media, the mainstay of news industry.

Defense planning is expected to be based on threat perception as well as cognition of best choice given availability of resource and the need to reduce India’s woeful dependence on foreign defense suppliers and supplies. So, for instance, when the Government went on to Rafale deal from 126, where 18 fighter jets were to be bought from Dassault and rest 108 manufactured in India by Hindustan Aeronautics Ltd under license, to outright purchase of 36 fighter jet at a cost of $8bn, with no transfer of technology to Hindustan Aeronautics Ltd, this leaves everyone flummoxed. If financial viability or resource crunch was the factor how come the buying off-the-shelf 36 fighters was considered viable but not purchase of 18 jets at less than $4 bn with ToT and manufacturing by HAL? There is also the air force’s assessment that they would need an additional 30 fighter jets as reserve? Surely financial outgo appears to be a lame excuse because the financial burden going to be much higher for 36 plus fighter jets and with nothing of value added or domestic capability boosted, is going to be a far higher cost since cost also includes negligible contribution to indigenous capability. The number of fighter jets being acquired also did not figure in any public debate earlier when the deal was being negotiated? Some did raise questions about Rafale per say but numbers and resource needed did not seem to perturb anyone for all those years. Does it mean that neither the Government nor the military, in this case the Indian Air Force, bothered whether the country could afford to buy such expensive fighter jets while deciding on the Rafale deal? It is not just the Congress party, but the military brass, bureaucracy and Atal Bihari Vajpaye led BJP government, all come under a cloud. Surely this deserves an inquiry if the MoD and his public denouement of previous Government is to be taken seriously. Besides, if all of the predecessor Governments failed, as the Prime Minister has often reminded us from foreign shores, then we are staring at a much bigger problem than imagined. Therefore, if a major policy decision can be over-turned summarily and/or privatization of defense manufacturing given the utmost priority it raises questions about the seriousness with which policies are made and decisions taken. Thus, the whole process of threat assessment, military planning and acquisitions, comes under shadow of doubt.

Consider the fact that the Defense Minister mentioned figure of Rs 60-65,000 cr which he claimed would be “saved” in the Rafale deal which could be better utilized. But this ‘saving’ is only a notional saving. Because, there is no actual money saved, since it was not available in the first place as the MoD himself claimed! Resource crunch apparently lay also behind the decision to “trim” the 90,000 soldier strong Mountain Corp at an estimated expenditure of Rs 70,000 cr to 35,000 troops at cost of Rs 38,000 cr. The new XVII Mountain Corp was meant to alter the ratio of 3:1 between China and India against each other across the LAC. If it is not as a pressing a need and can be cut down, then was the military assessment itself wrong?

Strategic affairs correspondent Manoj Joshi (5) refers to the “Operational Directive” issued in1980, under which India was to maintain “Dissuasive Deterrence” vis a vis Pakistan and “Dissuasive Defense” vis a vis China. But this approach changed after the Kargil War when in mid 2000 “Operational Directive” spoke of preparing for a two front war, China and Pakistan, covering “sub conventional to nuclear weapons”. The doctrine of ‘Cold start’ was part of this two front war readiness. Although ‘cold start doctrine’ was dropped under international pressure, idea of preparing to face a two front war remained. But “(t)his (shift in) assessment was not based on any rigorous exercise like a White Paper or Defense Strategic Review but several paragraph long document drafted by babus and the military….”. In other words, was the need to prepare to fight two front war an ambitious plan, and lay behind the exaggerated need for 126 fighter jets or for a new Mountain Strike Corp?

Let us take closer look at Rafale deal to understand this better.

Former Air Chief Marshal Fali Homi Major explained that number of squadrons required by Indian Air Force depends on “threat perception, weapon of adversaries and many other aspects. If it is a scenario involving threats from two fronts then we need 42 squadrons”. (6) Therefore, if the MoD now slashed Rafale deal does it mean that we are moving away from ‘two front war’ scenario and/or that threat perception is being lowered? And if 42 squadrons were needed to fight a two front war the reduction means that assessment is that there is no threat of two front war? Again, it now also emerges that for purposes of defense preparedness we have had a cheaper option to fall back on namely India’s missile capability. And, the MoD also said that 200 LCA (Tejas) would be acquired to make up for the shortfall over the next decade or so. Was he aware that “LCA do not fill the gap that are about to come when fighter jets (Migs) retire. They (Rafale and LCA) are totally different classes of aircraft.” (7)

Now all this would be fine if it was a corrective, but for the fact that by not cancelling the deal altogether and buying off-the-shelf 36 fighter jets at an exorbitant $8bn or halving of the Mountain Corp new problems are being sowed. For instance a major weakness that was sought to be addressed by MMRTC was to reduce the number of different types of fighter planes and also to use the numbers to acquire ToT for manufacture by HAL. Multiplicity of technology, spare parts suppliers, countries and companies involved has not helped develop indigenous capability. Air chief, S Krishnaswamy, pointed out that “Make in India does not promise self-reliance”. (8).He pointed out that licensed manufacture of Mig, Jaguar, Hawk etc did not help develop and manufacture indigenous design. Besides cost of license manufacture is way too high. And he pointed out that “Rafale experience should …teach us that we need to be self-reliant. And the only way to reach self-reliance is to design and produce from scratch.” He also stressed that 36 jets will not leave reserves for maintenance /repair and India may have to buy 30 more fighter jets for this reason. At what price will those come? So was the MMRTC deal good or Bad? Does buying 36 jets and compulsion to purchase 30 more of them, a better option even from the point of view of financial viability? And therefore, should MMRTC deal have been pursued or cancelled? There appears to be no clarity among military brass.

Another former Air Chief Fali Homi Major pointed out that no country/company parts with source codes and other strategic information as part of Transfer of Technology. So what makes us think that foreign OEM’s will share the same with their junior Indian corporate partners or part with source codes when they sit in the drivers seat, so to say. But then another question is posed as to why was the MMRTC deal being pursued which involved ToT and manufacturing by HAL? We are stuck with another doubt. The famous story of Sea Hawk acquired from UK had seen Indian navy ground in 1980s the planes and to cannibalise the same to provide spares etc because the British manufacturer refused to supply spares and components. Lets also recall that France provided source codes of Exocet missiles they sold to Argentina, to the Margaret Thatcher government in Britain in 1982 during Falkland/Malvinas war. What makes Indian strategic thinkers convinced that this will not occur?

So, the decision to purchase off-the-shelf thirty six Rafales, delivered over next two years, will freeze India in a situation of dependence on foreign suppliers, something that was sought to be eased. And a new defense policy regime which seeks to attract foreign manufacturers of military equipment to come invest and manufacture in India will create another level of dependency. Large foreign military investment can influence India’s strategic planning and place India under pressure of getting dovetailed to strategic interests of big powers and/or their client states like Israel. For instance US is keen to rope in India in its “pivot” of Asia strategy against China. Were US companies to set up manufacturing base in India, will it not require a commitment to not fall foul of US ‘interests’ and laws? Or are Indian strategic experts and policy makers are so naïve as to believe it will not happen with India? Israel, US, France, Russia will not invest out of charity or goodwill. It is a strategic decision and entails strategic proximity, thus impinging on India’s autonomous strategic thinking and planning, as well as foreign policy initiatives. How would this serve “national” interests? Indeed, whose interests will be served?

In the real world of power politics, foreign purchases and foreign military manufacturing bring greater dependence on outside powers and their inevitable influence pedaling, which is meant to tweak policies which benefit them. When big powers or even Israel invest in military production outside their own territory, what matters to them is that a strategic alliance is being crafted, even as they ensure that they become ‘active players’ in domestic polity of the country now as ‘stakeholders’ by virtue of their investments and control over weapon manufacturing. The so called joint venture are unequal partnership where the foreign investor calls the shots and the Indian partner provides an Indian face for public consumption and they remain junior partners but interests of the major partner would predominate. So does this mean that Indian ruling class’s hubris, to be the regional power, actually rests on alliance with US and NATO countries and consciously forsaking non-alignment, or independent course, is revealing many of our real vulnerabilities which will come in handy for foreign OEMs to exploit? Thus ‘Make in India’ claim as being an innovation actually shows itself to be yet another vacuous ‘idiom’ designed to push us into greater dependence on foreign manufacturers and foreign powers. The opening up of defense sector to foreign OEMs and India’s private sector, with India’s big corporate houses including Adani and Ambani, vying for a share of the pie by signing joint ventures or manufacturing spare parts, will expose India’s ‘independent’ foreign and strategic policy to pressure of a very different magnitude. Make in India, will actually make our existing dependence several notches higher by giving foreign OEMs a stake in Indian military sector and access to military planners and policy makers…Verily, illusion can mask a crass reality and ruling class’s hubris can become our undoing.

Footnotes

1. ‘India scraps duty benefits for defense PSUs to woo private companies”; The Economic Times 02/06/2015.
2. “To level the playing field, government withdraws sops for defense”; Pranav Kulkarni. Indian Express 02/06/15.
3. “Parrikar says Indian will buy 36 Rafale jets from France instead of 126”, HT Correspondent; The Hindustan Times, 01/06/2015.
4. Same as note (2)
5. “Upgrading Forces still a long way off” by Manoj Joshi; Mail Today 27 April, 2015.
6. Ibid.
7.“Rafale Deal is Great Numbers not so”; Asian Age 18/04/2015.
8. Former Air Chief Marshall PV Naik cited in “ ‘36’-Let the Force be with India”; Asian Age; 19/04/2015.