India’s Self-Reliance in Military Aerospace Industry

Having learnt a lesson from the 1990s, the Government of India (GoI) has since laid emphasis on indigenisation of the defence industry with a number of measures initiated in this direction. The promulgation of the Defence Procurement Procedure (DPP) and its subsequent refinements specifying the offset criteria, opening the market to the private sector and permitting Foreign Direct Investment (FDI) are some of the policies that have been formulated yet actualising procurement decisions into manufacturing have been relatively slow. As Air Marshal Vinod Patney (Retd), Director General, Centre for Air Power Studies, at a Seminar on ‘Energising Indian Aerospace Industry’ recently mentioned, “The silver lining is discernible, but barely.” An attempt, therefore, is being made to review the current status and trajectory of indigenisation in the aerospace industry.

Indigenised defence production is a significant factor that provides strategic independence to a nation thereby adding exponentially to national security. Given the specialised and highly controlled nature of the defence industry, the world over, military supplies are obviously high-value goods. Indigenisation provides security flexibility to a nation by reducing continued reliance on external sources and frees a nation from peripheral pulls and pressures, be they political or otherwise.

Technology has become a key element of national security and has even been termed as a force multiplier. In order to deal with the broad spectrum of national security issues, putting together strategies has to be with a direct emphasis on technology. While economic strength is the main pillar of national power, it is important that the military capability of a nation be also enhanced in tandem, armed forces, equipped with state-of–the-art war-fighting platforms are essential to any nation as insurance.

Recent wars that have occurred in the world have amply indicated that the 21st century belongs to aerospace power which is normally characterised by speed of response, adaptability to changing situations, long reach, precision-targeting capabilities to minimise collateral damage and resources to transport all forms of national power, wherever and whenever required. The volatile geo-political and security situation in the region, combined with India’s aspirations to become a regional power with a global reach, has made it imperative to possess all-encompassing military wherewithal especially in the aerospace sector. The capability should preferably be made within the country, as the problems associated with dependency on foreign sources have been made harshly evident after the disintegration of the USSR.

Having learnt a lesson from the 1990s, the Government of India (GoI) has since laid emphasis on indigenisation of the defence industry with a number of measures initiated in this direction. The promulgation of the Defence Procurement Procedure (DPP) and its subsequent refinements specifying the offset criteria, opening the market to the private sector and permitting Foreign Direct Investment (FDI) are some of the policies that have been formulated yet actualising procurement decisions into manufacturing have been relatively slow. As Air Marshal Vinod Patney (Retd), Director General, Centre for Air Power Studies, at a Seminar on ‘Energising Indian Aerospace Industry’ recently mentioned, “The silver lining is discernible, but barely.” An attempt, therefore, is being made to review the current status and trajectory of indigenisation in the aerospace industry.

A Peep into History

The current status of India’s defence production sector, especially in the aerospace segment, leaves much to be desired. The Indian aerospace industry, as it exists today, has been driven predominantly by military requirements, with a smattering of small agricultural aircraft. Hindustan Aeronautics Limited (HAL), the behemoth of Indian aviation industry, with a turnover of over of about Rs 15,000 crore and an R&D corpus that comprises ten per cent of its profits, has 14 types under license production and 15 types of aircraft through inhouse R&D, to its credit. Speaking at the Seminar on ‘Energising Indian Aerospace Industry’ Dr R.K Tyagi, the former Chairman, HAL stated that the company has on its rolls, around 34,000 employees and is a ‘Navratna’ company since 2010. It has a vendor base of about 2,400 and has more than 2,000 designers on its payroll. HAL claims to have a more than 60 per cent indigenous content in the much-delayed Light Combat Aircraft (LCA) Tejas, has collaborated with 20 academic institutions, 150 industries for its production of which 80 are in the private sector. Yet the aircraft has not been able to meet the requirements of the Indian Air Force (IAF) or else it would not have ignored HAL’s capabilities and opted to explore options abroad for new aircraft it so desperately needs.

Today, HAL is the largest amongst the aerospace companies in Asia, with the IAF and other sister services, as its ‘captured’ customers. Rather than move ahead with the IAF with mutual support, the two agencies continue to be locked in conflict. Notwithstanding its size, the HAL has not accomplished very much, though the former Chairman may have different statistics to present. No aerospace company in the world today, worth its reputation, attempts to cover all aspects of aerospace activity, as HAL does. It is engaged in design, development, manufacture, repair/overhaul and upgrade of fixed wing aircraft, helicopters, engines, accessories, avionics, structures for space launch vehicles, integrated systems for satellites and industrial/marine gas turbine engines. The technologies in the aerospace industry are so diversified over a broad spectrum, that it is almost impossible for any company to be self-contained, irrespective of its size; it has to have cross-linkages to be vibrant, proficient and economical. Yet, HAL attempts to do just the opposite!

Major contributions in the fields of science and technology by organisations such as the CSIR, DRDO and ISRO, in the three to four decades after independence, bolstered the nation’s march towards progress. Notwithstanding the contributions, the Indian Armed Forces have continued to depend on imports to meet their needs for military hardware. Even as India is in the seventh decade of independence, the situation has not changed much. The Indian Army now wants to replace the indigenous INSAS rifle with one from a foreign vendor while the IAF is looking to augment its operational and strategic capability with world class aircraft manufactured abroad.

What Ails the Indian Aerospace Industry?

Defence technologies and more so aerospace technologies, are at the high end of the spectrum, very complex and expensive to develop and integrate, a fact not really appreciated and understood by many. The word ‘technology’ is often used in a rather loose sense. It consists of a number of hard and soft elements which have to be understood to form a comprehensive picture of ‘technology’. The hard elements consist of materials used, design documents, manufacturing/assembly infrastructure and other such items. On their own, these however, do not complete ‘technology’. The soft elements too, are numerous and include human skills, attitude to absorb knowledge, teamwork to handle new equipment, leadership and management processes. This package of the hard and soft elements is a part of ‘technology’, whenever one talks of technology development or assimilation.

Absence of a technologically advanced and an internationally competitive industry greatly impacted India’s efforts in the aerospace sector. What little that we designed and manufactured in the past is reminiscent of cars such as the Fiats and Ambassadors that monopolised the Indian automotive segment for a long time. The last two decades plus have seen a rapid modernisation of the Indian industry in general but the aerospace sector has yet to acquire requisite momentum and enthusiasm, so essential to service domestic force modernisation requirements. Just as the DPSU-bureaucratic combine has flourished over the years, the demand and consequent dependence on foreign supplies has continued too.

The Indian aerospace industry has been stuck in the comfort zone of ‘licenced production’, with the bureaucracy supporting it with the insistence of a clause of Transfer of Technology (ToT) in almost every contract. Little has the bureaucracy realised that a ToT as it exists today, offers only modern production techniques but does not help in obtaining modern technology to assist in design and development as the IPR continues to remain with the original equipment manufacturer. There is, therefore, a need for a change in policy to arrive at correct assessments and decisions across the spectrum of political leaders, bureaucrats and technocrats.

Inadequate privatisation has been a significant cause for the stagnation of the aerospace industry. The public sector (read HAL) may have developed medium and small entrepreneurs, but only as tier-3 and tier-4 suppliers and not developed many or any as tier-1 or tier-2 suppliers. As a result, the capacity of the local industry for production is limited to just about 25 per cent of the demand. Why have the successive governments been hesitant to implement policy changes that have been announced earlier?

For an answer, one needs to go back into history, to the rationale that existed when laying down the First Industrial Policy of 1948. This Policy was accorded the status of a statutory legislation by the Industries (Development and Regulation) Act of 1951. It was visualised that since the defence industry was critical to national security, the country needs to be self-reliant in this sector. It was also stated that the industry must remain under complete control of the government, as it requires heavy investment, which only the government can provide. Accordingly, the GoI invested heavily in setting up the massive empire of DPSUs and DRDO, the capacities of which match the biggest, and in some instances, even the best of the world but the output has been abysmally low.