No government agency talks more about indigenisation and self-reliance than the ministry of defence and has a worse record to show for it. India earned a top ranking in the latest international arms transfer report of the Swedish think tank, the Stockholm International Peace Research Institute,
as theworld's largest arms importer.
It is a position, says retired Vice-Admiral Premvir Das, India will hold for years to come because its armed forces need to buy $ 40 - 50 billion in capital equipment.
There are two broad reasons why India fails so miserably to become more self-reliant in arms production.
One is a superstructure of inefficiency that is held in place by corruption and inertia. The Tatra truck deal has long been a byword in arms procurement incompetence. Over 25 years, the Indian army bought 7000 trucks from the Czech Republic at roughly double the cost they are sold in their home country. The indigenisation rate was so poor the trucks do not have right-hand drive to this day. General VK Singh's claim he was offered Rs 140 million to keep India buying Tatras would explain why this absurd state of affairs existed for as long as it did.
India has a reputation in the international arms industry for importing substandard equipment at inflated prices. As the SIPRI report points out, measured over a five-year period, Russia has remained India’s largest weapons supplier. But Russia’s comparative advantage in military sales is partly an ability to give huge kickbacks. The Russian Accounting Chamber, its CAG equivalent, in 2001 noted that the umbrella arms exporting firm, Rosoboroneksport, kept such convoluted finances it could not understand them. Trade experts privately say Indian middlemen in Moscow sales get 10 to 15% of the contract and 5%, curiously, has to be paid to the Russian government.
The second reason is the nexus between the mandarins of the defence ministry and the state-owned arms companies that keeps private Indian firms at arm’s length. As defence ministry officials privately admit, institutions like the Defence Research and Development Organisation and Hindustan Aeronautics prefer to import foreign-made weapons rather than allow the Tatas and Mahindras to get a real share of the contracts. Their fear: the competence of the private sector will marginalise them.
Even the official defence indigenisation figure of 30% being Made in India is a myth says retired Brigadier Gurmeet Kanwal of the Combat Land Warfare School. “Ten to 12 percentage points of that is screwdriver usage – importing kits, assembling them and giving the smallest value addition.”
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