Impact of Defence Offsets on Military Industry Capability & Self-Reliance : The Road Ahead
Author | : | S N Misra |
Year of Publication | : | 2012 |
Publisher | : | KW Publishers Pvt Ltd |
ISBN - 13 | : | 9789381904084 |
Edition | : | First |
Language | : | English |
Binding | : | Hardcover |
Subject | : | Budgeting |
About the Book :
India embarked upon the liberalisation path in1991 by
dismantling the Licence, Quota, Permit Raj. A decade later, the defence sector
allowed100 percent private sector participation with 26percent Foreign Direct
Investment (FDI). The offset policy in 2005 and its subsequent refinements
aimed at leveraging India’s big ticket acquisitions to bring in substantial
FDI, Joint Ventures (JVs) and outsourcing arrangements, thereby improving the
self-reliance quotient. Despite such policy initiatives, India’s military
industry capability and self-reliance remain at a low ebb. There is
considerable unease over the implementation of defence offsets, due to the
meagre inflow of FDI into manufacturing and the R&D sector, lukewarm long
term investment interest of foreign arms majors in Indian industry and
outsourcing arrangements predominantly for low end products, services and
Maintenance, Repair Overhaul (MRO) so far.
To galvanise the process, the government needs to develop a comprehensive
industrialization strategy for the manufacturing sector and dovetail defence
industry capability as part of this larger policy mosaic. Use of offsets can be
a critical facilitator of this strategy. Of the four BRIC (Brazil, Russia, India,
and China) countries that are expected to be global leaders in 2020, Brazil,
China and Russia are seen to have taken significant strides in aerospace,
shipbuilding, manufacturing, exports and R&D, with offsets playing a
significant role.
India is yet to realise its full potential in these areas. The offset policy
can be a powerful instrument for such global leadership. FDI in defence should
be increased to at least 50 percent as this is likely to bring in significant
key manufacturing and design technology capability.
Simultaneously, substantial R&D investment and joint technology projects
will be needed to spur the export potential and the spin-off to the civil
sector. Front end defence technology in electronics, avionics and metallurgy
and propulsion has always been a precursor to overall growth in Science and
Technology (S&T) and national capability build-up. This has to be
supplemented by social sector investment, skill upgradation and training. A mix
of direct and indirect offsets will bolster this process.
A liberal offset policy, with strong government mentoring, has the heady
potential to make India a global hub in defence technology and manufacturing,
and more self-reliant in critical defence systems and platforms.
About Author :
S N Misra: Born on December 31, 1954, S.N. Misra has a first class Masters degree in Applied Economics and has had 35 years of distinguished service in the Ministry of Defence as JS (Aerospace), DRDO and the corporate sector. He has contributed significantly to major policy documents like the Defence Procurement Manual 2005 (DPM-2005) where he chaired the committee and Defence Procurement Procedure-2005 and offset policy, receiving encomiums from the Prime Minister Office (PMO) and Rashtriya Mantri (RM) for DPM-2005. He was closely involved in strategic programmes like the fifth generation fighters and multi-role transport aircraft and major production programmes like the SU-30, Hawk and advanced light helicopters. His doctoral dissertation on Economic Impacts of Defence Offset Policy; The Indian Experience is expected to contribute significantly to India stride towards higher self-reliance in niche defence technology. A regular contributor to professional journals like Journal of Defence Studies, Indian Defence Review, Air Power, Vayu and India Strategic, he is posted as Principal Controller of Defence Accounts (Navy).