India Defence Sept 2008: The Future of India’s Defense Industry
As India rises to become a key defense market, and a future market player, a number of DID features have examined various aspects of its industry and procurement structure. To become a future market player, however, and to hold pace with rivals like China who are outspending India by ratios around 5:1, India will have to improve a defense industry and acquisition process that have delivered far more spectacular failures over the past 30 years than successes. See esp: “India’s Defense Industrial Base: Personnel“; “India’s Defense Market: Obstacles to Modernization“; and “India’s DRDO Rethinking the Way it Does Business.”
Some backlash has even begun, as demonstrated by the de facto cancellation of the indigenous Arjun tank program. Nevertheless, India’s reform process remains incomplete. On Sept 11/08, Lt. Gen. (Retd) Vinay Shankar, PVSM, AVSM, VSM wrote “Defence Industry” for Indian Defence Review, examining the current state of India’s defense industry, and of ongoing efforts to reform its low productivity:
“Our process of reforms in the management of the Government controlled defence research and production establishments, have regrettably floundered. Many studies have been done, yet-to all intent and purposes-the drift continues. Over the last three to four years the Government has been pushing for public private partnership. The idea being that such association would bring about the desired efficiencies in the public sector. But the problem is that such forced marriages do not really work. Driven by expediency, some private companies, may consider coming to an under-standing with PSUs for the short term, but such arrangements are not likely to be conducive to the real growth of the defence industry…”
Lt. Gen. Shankar outlines what he sees as the strengths and weaknesses of that industry, the efforts and challenges faced by reform efforts to date, the role and effects of foreign firms in India, and the measures he believes will be necessary to make Indian industry a future player in the global defense market.