Signs of change in India’s Defence Industrial Base (RUSI Newsbrief)

by Ajai Shukla

RUSI Newsbrief, November 2013

Change does not come easily to a fifty-five-year-old monolith, whose fifty-two laboratories and 30,000 technicians have long enjoyed a monopoly on the design and development of India’s defence equipment. Yet rising public clamour over India’s embarrassing status as the world’s largest arms importer is forcing the Defence Research and Development Organisation (DRDO) to transform itself from a sluggish and barely accountable government department into a more agile and outward-looking organisation that can translate its substantial funding and extensive experience into weaponry that satisfies the demands of the Indian military.

The DRDO has succeeded, in spite of tight technology sanctions imposed by the West after India conducted a nuclear test in 1974, in developing nuclear-capable ballistic missiles, a nuclear-propelled attack submarine, an apparently successful anti-ballistic missile shield and highly technical electronic warfare equipment. Yet the DRDO has faced decades of justifiable criticism for delays and performance shortfalls in delivering conventional platforms such as the Tejas light combat aircraft, the Arjun tank and the Akash surface-to-air missile, all of which are entering service a decade or more later than planned.

However, the DRDO, owned by the Ministry of Defence (MoD), is only one part of India’s defence industrial base, albeit a high-profile one. Set up in 1958 in the heyday of the Nehruvian ‘command economy’, when the private sector had only rudimentary capabilities, the DRDO is granted funds annually  – £1.07 billion or 5 per cent of the defence budget in 2013–14 – with which to design and develop defence equipment. This equipment is then manufactured by eight MoD-owned defence public-sector undertakings (DPSUs) and forty-two ordnance factories (OFs), some of which were founded in the late eighteenth century.

With the design agency disconnected from manufacture, reasonably good designs have, at times, failed the user test due to shoddy manufacturing. The MoD, however, remains deeply invested in the DPSUs and OFs, assuring these organisations of orders even though the DRDO has, increasingly, demanded the power to choose private-sector companies as manufacturing partners. As such, between the military, the DRDO, the DPSUs, the OFs and the MoD, the design and manufacture of indigenous weaponry has degenerated into a blame game in which foreign vendors are the only winners.

The classified report of the Rama Rao Committee – established in 2007 to consider how best to restructure the DRDO to increase efficiency – has gathered dust in the MoD ever since it was submitted in February 2008. In September, however, the DRDO’s new director general, Avinash Chander, signalled his determination to implement reform.

Indeed, in the three months since his appointment on 1 June, he has decentralised responsibility for equipment development programmes, placing each of the DRDO’s technology ‘clusters’ under the directorship of a senior scientist. On the face of it, this appeared to be merely a change of nomenclature, with the senior scientists having previously held the title of ‘chief controller of research and development (R&D)’ of their respective clusters.

In fact, the change of title to ‘director general’ (DG) has endowed these senior scientists with executive responsibility. As chief controllers, they advised and co-ordinated but the success of equipment development projects was the responsibility of ‘project managers’, who were usually (but not always) directors of a laboratory within the DRDO. Now, however, the DGs are responsible for the projects developed by their laboratories, thereby creating an additional level of supervision and accountability. This is illustrated by the case of the ‘missile cluster’, comprising four laboratories which co-operate to develop and test missiles, such as the Agni-V intermediate-range ballistic missile. Previously, the Agni-V project director functioned under the chief controller (Missiles and Strategic Systems), who was not directly accountable for the programme’s success or failure. Now, the new DG (Missiles and Strategic Systems) Dr VG Sekaran is held responsible for any failures, delays or cost overruns.

This applies to all seven technology clusters now led by the DGs, including aeronautical systems (Aero), electronics and communications systems (ECS), missiles and strategic systems (MSS), naval systems and materials (NS&M), armament and combat engineering (ACE), life sciences (LS), and micro-electronic devices and computational systems (MED & CoS).

Furthermore, unlike the chief controllers who functioned from DRDO headquarters in New Delhi, all of the DGs will be co-located with their laboratories. The DG (Aero) and DG (ECS) have already transferred to and begun work in Bangalore. The DG (MSS) has relocated to Hyderabad, DG (NS&M) will soon be located in Visakhapatnam, while DG (ACE) will be headquartered in Pune. The other two DGs, meanwhile, will continue to function from Delhi. According to Chander, ‘The DGs will come to headquarters only for budget planning, review programmes or if additional funds are needed’ and they will have ‘the authority and responsibility to deliver products’ as part of an effort to ‘create a focused hierarchy in DRDO’.

Similarly, Chander’s own post could soon be beefed up. Currently, the DRDO chief wears three hats, as DG DRDO, secretary R&D and scientific adviser to the defence minister. Now that he is overseeing the functioning of seven empowered DGs, however, the Rama Rao Committee has recommended that the post be upgraded from DG DRDO to ‘chairman DRDO’.

A new energy is also evident in the DRDO’s unprecedented visibility as one of the biggest exhibitors at Seoul’s recent Aerospace and Defense Exhibition 2013. Here, in a marked departure from New Delhi’s longstanding squeamishness over public arms exports, the DRDO displayed a range of indigenous defence systems, including the Akash missile, the Tejas aircraft, the Pragati surface-to-surface missile, an airborne early-warning-and-control system and several other high-technology systems including sonar, battlefield radar and identification-friend-or-foe systems.

The Indian military’s reluctance to procure DRDO-designed equipment, due to the manufacturing issues noted above, has prevented the organisation from seeking buyers abroad. Now, however, India’s arsenal includes some 1,570 billion rupees-worth (£16 billion) of DRDO-designed weaponry. This figure is rising rapidly, with the Indian Army (IA) and Air Force (IAF) buying Akash missile systems for the Sino-Indian border, the Tejas fighter entering squadron service with the IAF, the Arjun tank besting the Russian T-90 in the army’s comparative trials, and several design breakthroughs in ballistic missiles, radars and avionics.

In this context, the DRDO chief has confirmed that at least two Southeast Asian countries – most likely Vietnam and Indonesia – are keen to buy the BrahMos cruise missile, developed by the DRDO in collaboration with Russia’s NPO Mashinostroeyenia. The DRDO has also received enquiries about the Akash surface-to-air missile.

Moreover, such foreign orders could lower production costs, thus making DRDO equipment more attractive to the Indian military. Currently, the DRDO plans to replace the expensive foreign sub-systems used in its tanks and aircraft with systems built under licence in India. However, this is not yet economically viable, given the relatively small orders placed by the Indian military for indigenous weaponry: just one squadron of Tejas (twenty fighters), with another squadron to be ordered once the aircraft is operational (probably by the end of 2014), and 124 Arjun tanks, with a matching order for the Arjun Mark II once it clears trials. The DRDO calculates that larger orders, in the realm of at least 300 Arjun tanks and 100 Tejas fighters, are essential for economically indigenising key components like the Arjun’s thermal imaging sights and the Tejas’ airborne radar. An overseas order, it is hoped, might make up the numbers.

In order to pursue such opportunities, the DRDO is setting up a marketing arm similar to Antrix, the government-owned company responsible for the Indian Space Research Organisation’s marketing activities – a measure  also recommended by the Rama Rao Committee. With the MoD currently reviewing the DRDO’s proposal in this regard, the organisation continues to undertake its own marketing with some degree of success, having sold the technology behind an explosives detection kit to a US company in August, for example.

At the same time, the DRDO’s new openness – a marked shift after decades of insularity – is providing foreign manufacturers with attractive opportunities to access the Indian market through joint development projects. The Pentagon, for example, has proposed that an Indian company co-manufacture the Javelin anti-tank missile in India while the DRDO simultaneously works with Lockheed Martin and Raytheon to develop a next-generation version.

This is only the latest in a sequence of recent proposals for co-development projects, many of which are already underway. The trend began with the aforementioned Indo-Russian BrahMos supersonic cruise missile, which is now being inducted in large numbers into the Indian military. On the anvil, at the same time, are two major co-development projects between the DRDO and Israel Aerospace Industries: one for the so-called long-range surface-to-air missile (LR-SAM) – a defence system for Indian Navy warships, designed to intercept anti-ship missiles at ranges of up to 70 kilometres; and the other for the medium-range surface-to-air missile (MR-SAM) for the defence of IAF bases and the Indian border. While both versions use the same missile, the MR-SAM system’s radar and command-and-control systems are configured for ground use, while the LR-SAM systems are customized for warships.

 

Going forward, the next item on the DRDO’s priority list as its restructuring continues will be the establishment of a Defence Technology Commission, as recommended by the Rama Rao Committee, to form an overarching body for framing national policy on high technology and defence indigenisation. Like the successful Atomic Energy Commission and Space Commission, established in 1958 and 1972 respectively, it is envisioned that the commission will act as an empowered body able to harmonise service requirements with R&D priorities; weigh in on the creation of testing infrastructure; co-ordinate the technological capabilities of academia, research establishments and the government; and smooth the interface between design and production agencies. Finally, perhaps the greatest expectation placed upon the Defence Technology Commission is that it will inculcate a culture of co-ordination between the various establishments and ministries with  a defence R&D function.

The success of the DRDO’s efforts to restructure will depend heavily on how much the current government and its successor, due to be elected in the first half of 2014, continue to emphasise indigenisation. In the past, this has been a gradual and incremental process, not least because the military has historically regarded defence imports as essential to combat readiness. However, change is in the air. The new defence procurement policy that came into effect on 1 June specifies that defence equipment will only be imported if the option of indigenous development and manufacture is explicitly ruled out. If this is observed in both letter and spirit, the DRDO and the Defence Technology Commission will have significant influence over the equipment profile of India’s military in the years ahead.

Ajai Shukla

Former colonel in the armoured corps and Strategic Affairs Editor for Business Standard, a leading Indian daily newspaper. He blogs at Broadsword (ajaishukla.blogspot.com) and his twitter handle is @ajaishukla