India’s Defence Minister: Improve Quality, Or Else
At a recent international arms conference in New Delhi, Indian Defense Minister Pranab Mukherjee warned domestic arms makers to sharpen their skills or perish in the face of intense competition from foreign rivals in a globalizing world. AFP reports that the warning came amid reports of military complaints over the quality of hardware and spare parts supplied by India’s own arms industry.
The warning is valid to a point, and private sector procurement is finding a niche in India. Still, there may be less here than meets the eye.
According to AFP, India opened defense production to the private sector in 2001, and permits direct foreign investment of up to 26% in joint projects. State-owned defense firms annually procure goods worth 120 billion rupees ($280 million) from private businesses, while state-owned ordnance factories outsourced production work worth 190 billion rupees ($443 million) to private companies.
India’s software development community, which boasts more Level 5 CMMI firms than anywhere else in the world, shows that quality is not a foreign concept to Indian organizations per se.
As DID has noted in our coverage of India’s annual Ministry of Defense report, however, large segments of India’s arms industry are government-owned. Given the number of jobs (read: votes) dependent on these enterprises, the political reality is that closing these firms or even substantially reducing their workload would be extremely difficult. As such, threats of competition and closure are unlikely to mean very much to large sections of India’s defense industry.
DID has also covered India’s new foreign procurement rules, with their high levels of required local industrial offsets, and its procurement system difficulties that include development programs and other projects that miss their completion targets by over a decade.
Exhortations alone will not fix underlying systemic problems, and the incentive patterns that contribute to them. This is as true in India as it is everywhere else in the world.