Indian Defense Sector: 10,000 feet view

India recently successfully test fired the BrahMos cruise missile. This is a great step forward and such news does help in creating a sense of pride as well as security. But, in terms of modernization of our arms and ammunitions, where do we stand vis-a-vis the other superpowers of the world? I am no defense analyst and I have never researched upon the defense sector in India. However, having been brought-up in army cantonments, I have seen the scenario closely. Moreover, I have got opportunities to talk to the people who are directly associated and so "I think" I know a little.

I am not worried about the men in uniform. Though it is fact that the enthusiasm towards serving the Indian Army, Navy or Air Force is decreasing (and it is indeed a matter of concern), I am sure that what we have is among the best in the world. What I am more concerned about is the state of affairs when it comes to arms and ammunitions. We do develop guns, missiles etc but the frequency of new product development is very low compared to most other countries. I do not think that our INSAS and SLR rifles stand anywhere when compared to the weapons used by the soldiers of US, Russia, China etc. There is a particular program on Discovery Channel that shows "Future Weapons". Compared to those weapons, the weapons used by Indian Army are like "bows and arrows". So, where does the problem lie? Are we so backward in terms of technology that we cannot produce those weapons? I dont think so. The problem, like all problems in India, lies in the system.

Ordnance Factories in India: Pain Points

I cannot comment on all the ordnance factories in India but I have seen two of them pretty closely. The first one is the Ordnance Factory Medak. This factory makes armoured vehicles. The amount of land that this particular factory covers is enormous. I was told that two factories were supposed to come up on the alloted land however, only one came up in the end. This factory is HUGE in terms of the total area. Another interesting piece of information that I got regarding the factory is that Indian Army is the sole client of the factory and the army is hardly ordering for such vehicles. So that means the factory is not solving any purpose at all. To justify its existence to some extent, the factory works on converting ordinary vehicles to bullet-proof VIP vehicles!!!! I must say, brilliant use of the tax payers money.

The other ordnance factory that I have seen pretty closely is the Rifle Factory, Ishapore (West Bengal). The factory is the largest, if not the only, supplier of rifles to the Indian Army and other defense entities. Now, this factory does produce good rifles but what about the cost? I was told that the factory is majorly overstaffed. To add to the problems, the target given to each employee can be achieved in couple of hours. So the workers come in the morning, finish the work in a couple of hours and then discuss politics, football, mamta banerjee, bipasha basu, ravindra sangeet etc. They work the normal hours and later do overtime as well!!! There was this particular gentleman who could barely walk properly due to his old age and he had problems with his vision as well. Yet, he used to come every morning, sit under a tree and leave late in the evening. This was is daily routine. This guy used to take the normal wages as well as the overtime pay!!! And guess who pays for all this fun Me and you. So, whats the solution of all this?

Possible Solution

I was told that each rifle that is produced in Rifle Factory, Ishapore can be produced in at least one-third the cost by a private player. Privatizing the ordnance sector is a possible solution, if not the best solution. Several global defense contractors like Lockheed Martin, Raytheon etc (Time to show off my research on the US Aerospace and Defense sector) would love to pounce on the opportunities in this market. Even if we do not want to attract foreign hands, I am sure companies like Tata, Mahindra and Mahindra etc will be interested. We do not know who all will be interested as have never opened that window and looked outside (my guess is Mr. Mallya will be more than interested) but thats not the point. The point is that people will surely be interested to set up manufacturing plants in India and to serve the demands. But we must look at the pros and cons of privatizing the ordnance sector.

Privatization: Issues and Limitations

1. First and the foremost, what will happen to the thousand of workers that are presently working in the ordnance factories across India? But that can be solved. I am sure, a private player can compensate the workers much better than the Indian government presently does. Private players can associate incentives with efficiency. At least the younger workers will be (should be) interested in joining the private players. I do agree that several workers will not like this idea and would not like to work for a private player. Afterall its in us to resist any kind of change. Now, even if those workers or all the workers are asked to stay at home and are paid their salaries till the end of their working career, I think the equation will still work out to be profitable.
2. The other problem could be with the "change management". I am sure there will be several strikes as well as riots, especially when a few ordnance factories are in West Bengal. But that problem will have to be and can be dealt with strongly and strictly.
3. The existing policies and regulations will have to tweaked and going by the past track record, this can take a zillion years

Privatization: Positives (Top of the Mind)

1. Cost will be reduced and hence the defense budget will go down. The savings can be utilized in other sectors or can be used to purchase arms from other countries or can be invested in research and development
2. There will be a better management of resources (especially land)
3. The private players, with their financial might, can invest heavily in research and development. They will ensure results. This can help us in creating better weapons in India itself.
4. If the government permits, the new and better weapons, tools, equipments, vehicles can be sold outside India. These products will be cheaper as India is a low cost manufacturing location and hence will easily find market across the world (depending upon the policies of the countries)
5. Indian defense entities as well as the economy will get stronger.
6. It will give a strong message that "chalta hai" attitude is no longer acceptable

Definitely worth a try, isnt it?