Accommodating corporate aspirations would be the biggest task before V K Atre Task Force on Strategic Partners.
In India, attempts at reforming complicated sectors like national defence invariably start with constitution of committees / task forces and thereafter the leadership battles conflicting positions on recommendations, leading to either shelving of such reports or at best partial implementation that are more ad-hoc than preferred solutions. A survey of committees constituted between 2002 and 2015 justifies this assessment.
Consider three examples: a) Group of Ministers Report (2001) on management of national security had recommended, among others, creation of a Chief of Defence Staff (CDS) for single point military advice to the Defence Minister. The government ended up creating a half-way position of Chief of Integrated Defence Staff (CIDS) responsible for joint planning (more budgetary, less institutional level joint-ness). Needless to mention, both inter-service rivalries and civil-military differences were major factors for such a situation. b) Vijay Kelkar Committee (2004) on revitalization of defence industries had recommended ‘direct defence offsets’, which was incorporated as a mandatory clause in Defence Procurement Procedure (DPP-2005 and revised subsequently). Non-clarity and ad-hoc implementation mechanisms on defence offsets over the years have thus far produced dismal results. c) Prabir Sengupta Committee (2005) on selection of Raksha Udyog Ratnas (RUR) from the private sector to act as locomotive for a resurgent Indian military industrial complex was shelved the day its contents were deliberated. This time, interestingly, it was neither the armed forces nor the mandarins, but it was the Indian private sector, which ensured Sengupta Committee’s comatose status as most of the industry stakeholders did not agree to these recommendations.
Bulk of such efforts were made between 2001 and 2005, a period when the Indian private sector was brimming with enthusiasm with a hope of grabbing lucrative defence orders worth billions of dollars. Reforms in defence production and procurement continued for the next decade, primarily through periodic revisions of DPP and occasional announcement of new policies (like the Defence Production Policy – DPrP – in 2011). A few committees – V K Mishra on defence finance, Ravindra Gupta on defence industry, Vivek Rae on defence offsets, to name a few – surfaced in the past decade or so, whose recommendations were mostly kept mostly under carpet.
Net result reminds us of the French revolutionaries’ slogan – ‘we do not want higher or lower or same bread price’. Otherwise stated, interest group politics of armed forces, civil bureaucracy, scientific bureaucracy, state-owned and private industries can make or mar visions and processes of self-reliance in defence.
Modi government started with a promising note to scrub the shibboleths, but appears to be stuck half-way. MoD’s first Committee under Dhirendra Singh to recommend changes in DPP-2015 and embed ‘Make in India’ in defence sector has already led to constitution of a Task Force under former top defence scientist V K Atre to lay down criteria and methodology for selection of Strategic Partners (SP) from private sector to be engaged in high-tech, complex and next generation defence systems.
Four reasons are cited here for further deliberations on the subject. First, Dhirendra Singh’s SP model does not appear to be much different from RURs proposed by Prabir Sengupta. If past experience is of any indication, selection criteria to be laid out by Atre could face the same fate as that of Sengupta’s, unless proposed conditions are acceptable to major Indian companies. This is where Atre has to ensure a smooth selection process for the private sector. Second, some of the criteria laid down by Singh committee like no corporate debt restructuring or SP in one domain expertise (like aerospace or shipbuilding) have already been struck down by prospective companies. Singh’s assumption of domain specific criterion may theoretically lead to creation of ‘defence dependent’ companies like an Indian version of Lockheed or General Dynamics, while large Indian conglomerates should ideally be encouraged to be a GE or Airbus with domain specific expertise in military but diversified enough to weather or mitigate business uncertainties.
Third, while SP model is not a bad idea to start with, it should go beyond to include a second line of future SPs from the existing pool of medium sized companies. This would ensure a larger pool of specialized industrial capability in areas beyond specified projects like aerospace, naval, armored vehicles, etc. Fourth, proposed guidelines must ensure seamless business transactions between identified SPs and their state-owned counterparts as well as foreign OEMs. Similarly structured options for their relationships with component and sub-suppliers from the MSME pool need to be worked out.
Atre task force’s relative success will undeniably boost the national sentiment on self-reliance. The question is: will it deliver? Only time will say.