An IDC Analysis


New Delhi, 24 April 2002  


The military industrial capability is impressive but the mindset is missing!

The 21st Century and the Information Revolution have truly dawned together. Learning from the lessons of the Gulf war, Op Enduring Freedom and our own Kargil war, the Indian Armed Forces realise that the computing power of weapon systems, UAVs (Army and Air Force operate the Israeli Searcher and the Navy has ordered it) and Cruise missiles, hold many keys to newer and more accurate methods of combat with least loss of life. This message has not been lost on mid level officers especially in the Navy and the Air Force and they know India, with latent strengths in information technology, has the potential to benefit, as this strength can be married with foreign experience, who are hungry for collaborations.

The BRAHMOS experiment was a one off trial by DRDO, but why not open up the market to others, now that US sanctions are off. However most officers in uniform also know that bureaucrats and politicians and to a large extent the aged senior officers (retirement age of Chiefs is 62 now) with little exposure to the newer systems –– have an old mindset and on top of that the inter-services rivalry skews the decision-making.

The experiences of the Kargil war have highlighted the need to modernise and employ advanced technological equipment and systems to gain success even during peace-time, but the Armed Forces are engaged in a futile proxy war with Pakistan which claims lives and no one seems to mind.

India has a healthy defence budget of $14 billion, which is 2.8% of the GNP and last year MOD could not spend over $1billion because of the dilatory and preferential system being followed. It may be noted that pensions, nuclear and space applications for defence are provided for separately under the PMO, hence there is more money in the kitty.

The opening up of the auto industry has shown that the day can come when foreign defence companies especially from Israel, South Africa, France and Russia may be tempted to invest in India –– if the Government encourages transparency in publicising India's defence needs. Today the approach is sectoral and Israel has become the second largest supplier thus milking India. The CAG report has shown how secretive and how arbitrary the defence purchases have been. As an example, the cost of the Barak missile system at $40 million per set is a scream, now that Raytheon has shown that 8 AN/TPQS Fire Finder radars can be bought from USA for $146 m. It is cheaper than Ukraine's offer, even though it is under Foreign Military Sales (FMS) rules, which in the past the Indian mindset had opposed. For obvious reasons they wished to deal directly with firms. The whole approach was exposed by the Tehelka scam.

While the path is being paved by globalisation and liberalisation in the consumer goods sector and inflation is down, the military sector is getting even tighter with the Defence PSUs going on strike while the Army stands mobilised. DRDO, the arm that was set up to deliver latest equipment has mostly concentrated to reinvent the wheel, with laboratories all over the country manned by under-qualified staff. No one has audited their performance and when Admiral Vishnu Bhagwat tried to question it, he was sacked. Even after defence agents were legalised, is it not surprising that no one has come forward to be registered as defence Agents? The rules framed are draconian and yet names are whispered loudly.

The only major indigenous DRDO programmes that succeeded were in the field of missiles like AGNI, because the Russians gave unstinting support to ISRO for the PSLV, GSLV and the cryogenic engines. The other success story was Sonars for the Navy, because the Navy helped itself –– it has its own R & D unit –– the WEESE. In contrast the Arjun MBT, LCA, ALH and ATV programmes are all struggling.

IDC have been alluding to foreign collaborations which may be easily available to get such projects consummated, but that will require a new mindset. Otherwise mistakes will continue to plague us –– like the AVRO 748, that DRDO's CAB tried to convert into an AWACS but only succeeded in crashing it, with experienced staff on board and the ALH engine and gear box problems, and such. The Armed Forces will, of course, accept what is provided by DRDO in the same spirit as they have accepted decisions like the CDS concept without a CDS. It is the mindset.

The challenge is to translate India’s defence sector with collaborations and use the powerful computing programmes, latest electronics, CAD, CAM and such tools that are now universally available. Infosys, TCS and WIPRO who have defence contracts have displayed this ability. These same tools were also successfully employed in India’s nuclear tests and space and missile programmes by ISRO, BARC and DRDO.

One can therefore state with a modicum of confidence that India’s defence industries will come of age in the next decade –– provided the leaders stop hiding behind the antiquated Official Secrets Act of 1927. They need to display confidence in opening up the sector to private participation and permit the Government owned units freedom to collaborate with nations willing to do so in defence technology for mutual benefit.

In the 1990s, Singapore was willing to invest in joint efforts with India's DRDO to produce the multimode radar for the LCA but India was not willing. More recently an A50 AWACS from Russia was taken on lease and to study its sub systems for reverse engineering, but an order is still to be placed. A number of SAM missiles, naval torpedoes and army projects are ready to take off, if assisted by foreign expertise and collaboration of experienced companies, but bureaucratic resistance, vested interests, interference and frequent changes in QRs by the Services themselves, have ensured that projects have languished. This has encouraged lobbies to pitch for imports and stall home grown projects.

The Government’s military industrial tentacles are spread widely. There are 39 ordnance factories, some of them top of the line, controlled by the Ministry of Defence. Next are 5 healthy and well equipped but poorly managed public sector shipyards (Mazagon Dock, Garden Reach and Goa Shipyard of MOD and VSL and CSL of Ministry of Shipping). The widely spread aviation units of HAL and electronic manufacturing units of BEL, the vast array of 50 well equipped DRDO laboratories and a growing civil sector that now contributes to the $3 billion procurement programme annually. Mr Rajagopal a former Chairman of the Ordnance Factory Board, recently stated that the 155mm Howitzer ammunition produced in India was superior to that supplied by Bofors, and India was self sufficient in ammunition. A US firm Day and Zimmerman supplied the ammunition plant just before sanctions were imposed. However all these units have little liberty to take commercial decisions or even quote prices without reference to New Delhi's MOD mandarins.

It is time to take stock and survey the Indian military industrial scene. A re look is required of the technological inputs, the commercially viable manufacturing processes to produce weapons and systems of the high standards that the Armed Forces demand. It needs a change in the mindset. The will to change is lacking in many areas but a growing trend is emerging to recognise this infirmity especially as India is a nuclear power now. Today base technology can be bought and improved upon. BARC, which has successfully manufactured the Atom and Hydrogen bombs and many civil firms are well endowed with the state-of-art facilities. A survey of these is revealing beginning with the Government assets

Nuclear Capacity

The Bhaba Atomic Research Centre (BARC) near Mumbai has pursued bomb making since the 1960s and successive Prime Ministers have secretly funded it. BARC controls the Kalpakkam Reactor at Chennai for the Nuclear Submarine Project, Plutonium Processing Plant at Trombay and a Rare Metals Unit near Mysore that produces Uranium. The technical knowledge of the scientists coupled with support from DRDL Midhani and Terminal Ballistics Research Laboratory (TBRL) Chandigarh, produced the chemical explosives, detonators, lenses, the nuclear trigger and the bomb shell casings for the Pokhran-II explosions in May 1999. India has its nuclear arsenal at BARC in readiness. However India is still looking to Russia to execute and build the Kondakulum Nuclear Mega project and there are 90,000 tons of equipment for Atomic Energy Commission to bring and that is the way to go.


In the 1950s, Bangalore born Dr Kurt Tank designed the fine HF 24 at Hindustan Aeronautics Ltd but the lack of a supporting engine throttled the programme. Western pressures to cut off technology and India's over enthusiastic zeal to design a fly by wire unstable machine by itself is holding up the LCA. Yet the facilities at HAL’s eight units spread all over India have manufactured the MIG 27, Dornier-228, and HPT jet trainers with collaboration and SU-30 Mk I is the next project. The National Aeronautical Laboratory (NAL) at Bangalore has some of the latest computers and is a treasure house of aviation research, which could handle any 3-D Euler and Reynolds averaged Navier Stokes equations in the 1980s. India cannot go it alone in its huge aviation projects for long.

Turbines and Engines

The Indian Navy at its dockyards has excellent Gas Turbine maintenance facilities while the Gas Turbine Research Establishment at Bangalore is in the final stages of producing the GX-35 US Kaveri engine for the LCA, which even if successful may not get certification and the project will have to COMSIM i.e. computer simulation again as at present the GE 404 is being used for all computations. There is no dearth of personnel trained in GTs as the IN gets all set to induct the GE LM 2500 cleared by USA for its Project 17A frigates. In this field collaborations need to be allowed with ease like the Navy did for the Pielstick engines.

Materials aqnd Metallurgrgical Products

The Mishra Dhatu Nigam a PSU at Hyderabad under the Ministry of Defence and the Defence Metallurgical Research Laboratory (DMRL) of the DRDO have produced special metals and alloys including molybdenum technologies. DRDO units now are experts at Carbon technology that is fitted in the Agni and Prithvi missiles whose nose cones have to bear temperatures of 30,000º C when the missiles re-enter the atmosphere. The Units have imported the latest textile machines to weave the Carbon and other machines to fill the graphite, again spin offs of the nuclear and space programme. Foreign collaboration will help sales worldwide and IDC learn that Israel is negotiating.

Naval Technology

The Naval Physical and Oceanography Lab (NPOL) has successfully produced advanced sonars while the Naval Science and Technology Lab (NSTL) has manufactured decoys, torpedoes and mines. The Navy has inhouse expertise in ship design, weapons electronics systems engineering (WEESE) and the Naval dockyards are capable of maintaining the latest systems and submarines. The ATV project has another dimension of knowledge for the nuclear reactor and submarine building. The Mazagon Dock and Goa shipyards have capacity to turn out ships faster, if collaborations are entered into with South Eastern and Middle Eastern countries. Labour costs are cheap in India. The mindset and openness is the way to go.


The launching facilities of ISRO and the Vikram Sarabhai Space Centre have time and again proved that India is capable of successfully producing solid fuel rocket motors and launching space vehicles. ISRO bought off-the-shelf equipment from abroad. In fact, USA’s attempt to embargo Russia's sale of cryogenic engines to India speeded up the solid fuel technology. The DRDO has gained from the ISRO experience.

Weapons Systems–SPACE

The Combat Vehicles R&D establishment at Avadi that manufactures the T-72 and Arjun tanks, the Defence R & D Laboratory (DRDL) Hyderabad manufactures the Agni IRBM, the Trishul and Akash SAM systems, are all in their final stages of development. These have from time to time received help from India’s Space Agency –– ISRO which can truly boast of being among the top six in the world with a talented pool of scientists. If they also seek collaborations exports can be in their reach.

Civil Industry

In any defence project the Government has a big stake and therefore, in every country subsidies are given to firms to explore local manufacture. In richer countries two or more firms are asked to compete as is the case in the Joint Strike Fighter programme. In Europe, production is being shared between nations. In India, the Navy set up a warship building project team in the 1970s under the Director General Quality Assurance, DGQA and civil firms made good progress, but subsidies were given selectively. Civil Industries for Defence in India were initially encouraged and permitted to foray into just a few items but the progress was good. The Leander project saw Walchand Industries manufacture the shafting, a valve maker from Ludhiana –– Leader made excellent valves and other ancillary suppliers supplied switch boards, fire fighting equipment and lifting gear –– boilers were made locally by a Babcock and Wilcox licensee, the Bharat Heavy Electricals with its plants at Bhopal and Hyderabad produced the turbines. Bharat Electricals Ltd at Bangalore went into collaboration with Signaal of Holland and supplied C, L and X band radars and forayed into fire control equipment, including equipment for the Army and Air Force with communication companies like Racal. Hindustan Aeronautics supplied the air blowers and UHF radio equipment.

The scene was beginning to look good but the orders were not economically viable for the firms to sustain production lines. By late 1970’s the Soviet Union became the main supplier of ships (submarines, Petyas, Kashins, Minesweepers and Missile Boats) and aircraft. Collaborating with the Russians proved difficult with language and other finance related barriers. Then came a period where only small items were given out under the indigenisation programme. It was only in the mid 1990’s after the collapse of the Soviet Union that the Armed Forces and the Confederation of Indian Industries got together to encourage defence production by civil firms. Today many civil firms have excellent facilities to support the Armed Forces. Clutch Auto supplies clutch assemblies for the tanks, Larsen and Tubro is engaged in making helicopter harpoon decks, reactors for the ATV (nuclear submarine project), structurals and electronic equipment. Small firms like High Energy Batteries at Chennai have successfully produced indigenous silver zinc batteries for the A 244 Motofed Whitefield Italian torpedoes , and Silver Chloride Magnesium batteries for the Naval Science and Technological laboratory at Vizag engaged in upgrading the Russian CET torpedoes. Standard Batteries have very successfully provided large batteries for the Russian Kilo and Foxtrot Class Submarines and bagged exports orders from Algeria, again proving capability. ECIL produces a wide range of fuses, Kirloskars a private firm produces the Pielstick engines. A vehicle maker Mahindra & Mahindra has collaborated with with Plasan Sasa of South Africa to make armoured vehicles.

Of late, the Army and the Air Force have also taken to indigenisation seriously but relied heavily on the Government owned Ordnance Factories, DRDO and Hindustan Aeronautics in the case of the Air Force. The main reason why more civilian firms have not entered the scene is because of secrecy, lack of transparency, including secrecy in disclosing pricing of items that are imported. This has had its fallout in stunting local growth of the small and medium enterprises and an unambiguous policy on defence purchases. The Mumbai–Pune area has formed DEMA (Defence Electronics Manufacturers Association) with 38 entrepreneurs, which has taken on the challenge to goad the Government to offer cost of development. Some success has been registered and forebodes well for the future but still the whole matter is secretive and clouded with corruption.


India haphazardly but surely has attained R & D capacity and can produce defence equipment. It can be propelled to become fairly self reliant though not self-sufficient and look to exports. It would be essential to permit and even force some of the Government owned units including DRDO to seek collaboration from abroad and even encourage foreign participation and transfer of technology. The lack of an approved perspective plan, fissiparous decision making agencies and the temptation to buy off the shelf from abroad still pervade the scene. It is true the Chiefs of Armed Forces have a stake in self-reliance but they are also charged with the responsibility of defending the country in the event of war. These are the challenges when one survey India’s military industrial complex.

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