Privatization: a much needed step in country’s defence sector

The matter of privatization of Indian defence sector grabbed attention of Indian media after the BJP government came into power in 2014. The government has opened its defence sector to 49% foreign direct investment (FDI) through ‘automatic route’ and 100% under ‘approval route’. Government’s this decision is likely to result in more access to modern foreign technologies. But the critics have criticized this move of privatization by raising the issues related to unemployment and defence secrecy, which are likely to emerge from it. They argued that Private companies will always be guided by profit motives due to which thousands of people working in defence manufacturing sector are going to lose their jobs and national security can also be compromised.

Putting these issues in the agenda nearly four lakh defense personals resolved to launch an indefinite strike between 23rd and 25th January 2019, against the speedy privatization of the defense sector. The decision has jointly announced by three major defense unions, namely, the All India Defense Employees Federation (AIDEF), Indian National Defense Workers Federation (INDWF), and the Bharatiya Pratiraksha Mazdoor Sangh (BPMS).

If we look at the history of India’s manufacturing capabilities, while India got independence in 1947, our leaders never focused on the defense manufacturing sector, rather it relied on foreign partners. India never really had a dedicated defense manufacturing sector or companies that can produce good defense products for the country until now. 

After the economic crisis of 1991, India opened its economy and the infant Indian companies had to face tough competition and eventually, they died. Thus India never really got a chance to become a manufacturing hub but had depended on others for major engineering and defense products.

The bureaucracy can also not be ignored in the government who were authorized to carry out these tasks. Be it the Bofors scam or the Rafale deal, there has always been something that comes up, hindering the growth and development of the deals. The best example here to give is that of HAL Tejas, the concept which started in the 1980s to replace the MiG-21s only to be inducted into the 45 Sqn in 2016. That’s 36 years of loot, distortions, postponements and changes in bureaucracies. In case of defense privatization, when companies like TATA and Reliance manufacture for the country’s armed forces, it is sure as hell that it will not take 36 years from the start to the induction of an aircraft. 

Privatization of the defense sector was the need of the hour for India as public sector industries were not delivering quality products up to the requirements of our armed forces. Armed forces have witnessed faulty ammunition causing damage to the artillery guns, air defense guns and even the tanks used by Indian army. Moreover army’s primary assault rifle i.e. INSAS manufactured by OFB faced serious criticism from time to time for having problems like jamming and barrel blast. Country’s manufacturing sector have been known for delivering sub standard weapons and ammunition and this happens mainly due to the lack of competition in the respective field. The best example of this is Bhabha Atomic Research Centre (BARC) employing over 14000 employees and tasked to develop India’s nuclear ambitions. But instead, as said by a BARC employee, everyone does their own personal work. The workshop which is capable of doing wonders, now fail to even initiate a research. Their jobs are secured, if their performance degrades, they are thrown to a lower department where they continue to suck the same salary.

But the introduction of privatization in the defense sector is likely to solve many of these problems as it will create a competition among the various companies in order to grab the defense deals.

Positive effects of privatization in India’s defense sector: 

  • Privatization will allow Indian companies to set up joint ventures with foreign companies which will give them access to modern foreign technologies. These joint ventures then will be able to design, develop and manufacture sophisticated weapons in India.
  • Due to the emerging competition in the market, the quality of the products manufactured by OFB will get better, which will benefit our armed forces directly.
  • Our industries will then not only provide weapons to our forces but they will also be able to sell their products to different friendly countries as well.
  • In previous times India used to buy weapons directly from foreign countries (e.g. Russia) leading to a great loss of foreign reserves. Now having those technologies in India and manufacturing in India will save a huge amount of foreign reserves annually. 
  • Despite having the 3rd largest army in the world, Indian army is often called the ‘vintage army’ as more than 65% of the weapons in its arsenal are outdated.  Privatization will surely be going to give a boost to the process of modernizing the armed forces initiated by this government.
  • Privatization of the defense sector will open doors for different countries to establish better ties with India and develop new technologies together (e.g. USA established strategic defense partnership with India after seeing the great potentiality of Indian defense market).
  • Producing quality defense equipment needs years of research and experience. Purchasing well developed and battle proven equipment are very difficult due to the different restrictions over them and cost is always a factor. But getting those technologies through ‘Transfer of Technology’ agreements and then manufacturing them in India can deliver great results.

Above mentioned points are some reasons why privatization in defense sector is good, that it always keeps the employees and the companies, under the hanging sword of quality check. The performance and the delivered products of the employee or the company matter, their work matter. Thus the focus is on delivering sophisticated technologies and products of quality in a time bound manner as otherwise they can be replaced by others.

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Krishan Talukdar

Student of Kirorimal College, Delhi University, New Delhi

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