Future Trends
Future Trends – Indian Defense and Aerospace Market
“I am confident that India will emerge as a major global centre for defense industry. We have the basic building blocks for it in India; and, a large nation requirement. We will build an industry that will have room for everyone – public sector, private sector and foreign firms. ” – Prime Minister Narendra Modi
Indigenous Defense Manufacturing
Indigenous production of defense equipments is at the core of ‘Make in India’ programme. During the last three and a half years, the Indian government has taken a number of policy-based initiatives to boost the indigenous defense production, technology upgradation, and defense export capabilities. The recent amendments to the Defense Procurement Procedures, the introduction of New Strategic Partnership policy in DPP, Offset Policy, Simplified ‘Make II’, EODB initiatives and improvements in the procedures for the grant of industrial licenses kind of initiatives are encouraging the domestic players and foreign players to explore the different ways to leverage the opportunities of ‘Make in India.’ India’s indigenous defense manufacturing push is an opportunity and global defense players can improvise creatively to leverage this opportunity.
India as an Export Hub
The tagline of DefExpo 2018 is ‘India: The Emerging Defense Manufacturing Hub’, the objective of this year’s DefExpo is to brand India as a defense exporter of defense systems and components for all three services and showcasing strengths of India’s growing private industry and emerging Defense MSMEs base.
In the month of January 2018, India has joined the Australia group. Last year, India has joined the Wassenaar Arrangement, a multilateral export control bloc. In the month of June 2016, India was admitted to MTCR (Missile Technology Control Regime). India has joined 3 out of 4 major multilateral export control regimes. With the ‘Make in India’ and ‘Make with India’ push, India is emerging as an export hub and a number of countries are considering to base their operations in India and to leverage its locational advantages for export to international markets. In the mid-term review of FTP launched in the month of December 2017, the Indian government has announced fresh incentives worth Rs 8,450 crore to boost exports and support the MSME and labor-intensive industries. There is also an emphasis on the ‘Ease of Trading’ across borders, new products, and new markets.
Digital Army
The concept of Digital Army is not limited to the use of Digital technologies; it is also about having a seamless coordination mechanism which provides actionable and real-time information. Defense agencies across the globe are building the capabilities which help them to take timely decisions based on the right inputs at the right time. The Joint Information Environment of the U.S., UK government’s Defense as a Platform (DaaP) infrastructure, and Australian Defense Force’s Single Information Environment are some of the recent notable initiatives around the world. Israel has taken the Digital Army initiatives much earlier than others. In the year 2004, Elbit Systems had signed an agreement with the Israel Ministry of Defense for the Digital Army Programme (DAP). In 2014, IDF has concluded the deployment of the Tzayad (Digital Land Army) system in all of its field formations and now they are working to build the next generation of the Israeli Army’s digital C4I network.
In the year 2015, the former Defense Minister of India, Mr. Manohar Parrikar has launched the Digital Army programme. Mr. Parrikar has unveiled a series of product to promote digitalization of the Indian Army, such as IAF-HAL ePortal- an inter-organization information sharing system (IOIS) between the Indian Air Force and Hindustan Aeronautics Ltd. (an Indian state-owned defense company) to facilitate better coordination, transparency and faster decision-making, Army Cloud which includes a Central Data Centre, a Near Line Data Centre and a Disaster Recovery site for replication of its critical data along with virtualized servers and storage, Digi-Locker (a secure and exclusive data storage space to all the units and formation headquarters of the Army over its dedicated data network) and ARPAN 3.0 (Army Record Office Process Automation) etc. India has developed its first integrated defense communication network too. DCN is a strategic, highly secure and scalable system. It has a pan-India reach – from Ladakh to the North East to island territories. These steps are crucial in the process of transforming Indian Army from a platform-centric to network-centric force.
For the success of Digital Army programme, the participation/collaboration of both public and private sectors is needed. To speed up the Digital Army, force modernization and Make in India initiatives, last year Indian Army has launched the Army Design Bureau (ADB), an interface between the Army, Industry, DRDO, and Academia.
India’s Smart Border Management
India has a 15,106.7 km. land border and a coastal boundary of 7,516.6 km. including island territories. Securing the border against the infiltration and facilitating trade and commerce are some of the key objectives of the Indian border management.
In India, different borders present different challenges. On September 30, 2017, Indian Security Forces have detected a cross-border tunnel in the forest area of Damala nullah in Jammu’s Arnia sub-sector. This 14 feet long, three feet high and 2.5 feet wide tunnel was designed to facilitate the easy infiltration of terrorists from Pakistan. In 2016, some 242 cases of infiltration were reported from the Pakistan border and 95 infiltration cases at the Myanmar border. The India-Pakistan and India-Bangladesh are among the world’s most dangerous borders. India’s volatile border with Pakistan and Bangladesh are prone to a number of security threats such as infiltration and ex-filtration of armed militants, movements of non-state actors, narcotics and armed smugglers, illegal migrations, separatist movements, smuggling of counterfeit Indian currency etc.
For strong deterrence capabilities, defensible borders are crucial. The concept of defensible borders, as described by former Israeli national security adviser Uzi Dayan, is based on the three key components: “strategic depth, the ability to defend yourself from an attack from the outside and fighting terrorism effectively.”
Indian government is reviving the existing security infrastructure to deal with the border security challenges. In January 2016, the government has approved an elaborate five-layer plan to stop infiltration on the India-Pakistan border. There is a plan to deploy close-circuit television cameras, thermal imagers and night vision devices, BFSRs, underground monitoring sensors, and laser barriers along the border. In 2015, the government has begun to implement the initial version of the comprehensive integrated border management system (CIBMS) project. One of the important components of the CIBMS is the use of satellite imagery, which helps security forces analyze the terrain and fortifications along the border. It also helps in planning operations and in infrastructure development. The technology to be integrated includes automated guns, radars with 360-degree detection capability, and versatile airborne micro-aerostat balloons fitted with high-quality surveillance cameras along the border.
Another significant initiative is Operation Chakravyuh. Under Operation Chakravyuh, a network of highly-sensitive equipment will be laid along the India-Pakistan border, which will be linked to a control room. The government has decided to install underwater and underground sensor systems to check infiltration and to maintain a 24×7 watch. The technology to be integrated includes automatic guns, radars with 360-degree detection capabilities, and airborne versatile micro-aerostat balloons fitted with high-quality surveillance cameras along the border.
Some of the notable initiatives of Center for Artificial Intelligence and Robotics (CAIR), DRDO
The Center for Artificial Intelligence and Robotics (CAIR) of DRDO is doing extensive research on high-quality and secure communication, command, control, and Intelligent Systems. The Radio Trunk System (RTS), Radio Local System, Artillery Combat Command and Control System (ACCCS) also called as ‘SHAKTI’, wireless message transfer unit (WMTU), Advanced Tactical Communication Systems for the Army such as Army Radio Engineered Network (AREN), Army Static Switched Communication Network (ASCON), Troposcatter Communication Systems, SATCOM, Battlefield Management System (BMS) etc. are some of the CAIR’s products which have significantly improved military communication in the border areas.
According to the “Joint Doctrine of Indian Armed Forces 2017”, the Force Restructuring and Force Development are the two major components of capability development. And the essence of ‘Force Structuring’ and ‘Force Development’ is to develop desired military capabilities to accomplish military strategic objectives.
The thermal imaging cameras (cooled/uncooled infrared detectors), advanced optoelectronics, advanced radar systems, SWIR imaging solutions, advanced night vision cameras, third generation NVDs, night vision binoculars, surveillance drones, smart handheld devices, advanced applications of data analytics and artificial intelligence are some of the latest border and surveillance technology-related trends that India needs to leverage for smart and effective border management.
There is a need to speed up the border management and force modernization initiatives. As Army chief Gen Bipin Rawat used to say that “whatever we have to induct must be done through fast-track procedures as technology becomes obsolete very soon.”
Startups/MSMEs Push
Encouraging the start-ups and SME participation in the indigenous defense manufacturing is a key priority of the Defense Ministry. On January 16, the Defense Acquisition Council, chaired by Defense Minister Nirmala Sitharaman, announced a revised and simplified “Make II” procedure, in which some special provisions are given to MSMEs. The Ministry, in cooperation with the Federation of Indian Chambers of Commerce and Industry, or FICCI, has launched a platform called “Society for Indian Defense Start-ups,” or SIDS, as an institutional-support mechanism for development and funding of defense start-ups.
The DPSUs and Defense Research and Development Organization (DRDO) labs will also collaborate with FICCI to nurture the MSMEs with the relevant expertise. For the first time, a number of Indian defense start-ups have made their presentations before the defense minister. Such initiatives reflect the government’s readiness to give Indian defense start-up and MSMEs a much-needed push.
A number of Indian MSMEs used to serve as the suppliers to DPSUs and are the key players behind the success of some major defense manufacturing projects. According to the Dhirendra Singh Committee’s report (a committee set up by India’s Ministry of Defense in 2015), almost 80% of components, aggregates and assemblies of complex weapon systems and aircraft are made by MSMEs, which are part of supply chains. According to this report, nearly 6000 MSMEs in India are supplying the components and sub-assemblies to the DPSUs, ordnance factories, DRDO and private industries.
Measures for MSMEs in the Union Budget 2018-19- The access to markets, non-recovery of dues from large-scale buyers and lack of adequate and timely finance are some of the most talked about challenges among SMEs. In the Indian union budget for 2018, the government has addressed these issues with specific measures. The government has proposed to bring public-sector banks and corporations onboard the Trade Receivable Discounting System (TReDS) platform and link this with the Goods and Services Tax Network, or GSTN. The TReDS is an online platform which was launched last year to facilitate the financing of trade receivables of MSMEs. The government has provided Rs 3794 crore (about $600m.) for giving credit support, capital and interest subsidy to MSMEs. The government will take some additional measures for addressing the non-performing assets and stressed accounts of MSMEs too. The target of lending under MUDRA Yojana has been extended to Rs 3 lakh crore. From this year, NBFCs (Non-Banking Finance Companies) will also facilitate MUDRA loans for MSMEs. The MUDRA scheme was launched by the Indian government to provide easy finance to entrepreneurs from rural and remote areas.
Balancing the global supply chain
China’s manufacturing dominance, combined with its hegemonic aspirations, can pose a great threat to the security architecture of responsible democracies of the world. A number of U.S. government reports underscore this view. For instance, in a 2012 report titled “Inquiry into Counterfeit Electronic Parts in the Department of Defense Supply Chain” by the Committee on Armed Services, the U.S. Department of Defense points out a “flood of counterfeiting” in the United States Defense supply chain. This investigation uncovered some 1,800 cases of suspected counterfeiting of electronic items. The total number of suspected parts involved in those cases exceeds a million. The report identifies China as the dominant source country for the counterfeit electronic parts that are infiltrating the defense supply chain and the Chinese government has failed to take steps to stop counterfeiting operations.
China’s counterfeit electronics threatens the reliability of India’s military hardware and the critical infrastructures for telecommunications, energy, and transportation. Last year, a report issued by India’s ADB (Army Design Bureau) has pointed out that a large amount of electronic circuitry being used in communication equipment is of Chinese origin and Chinese malware can bring down India’s military network. In the past, Indian security agencies have raised concerns over the infiltration of Chinese telecom companies in the Indian market, particularly about two Chinese companies Huawei and ZTE. These telecom companies are known to have affiliations with the Chinese People’s Liberation Army. Huawei, founded by a retired military officer Ren Zhengfei, enjoys the support of the Chinese government. In 2013, India’s National Security Council has raised concerns about the connection of these telecom companies with a Chinese army project called PLA – 863. In a report submitted to the government, NSC has mentioned that the malicious hardware and software implants could be a potent espionage tool for penetrating sensitive and strategic national security sectors. There is a need to give a strong push to our local electronics manufacturing through ‘Make in India’ policy!
The Chinese industrial policy, Made in China 2025, put emphasis on semiconductors. China aims to become a global superpower in microchips. In both, the military and consumer products, the result of using a counterfeit chip can vary from an abnormal functioning of the system to life threatening. A huge number of counterfeited electronics and semiconductor components sold annually in the global market.
Indian defense and electronic manufacturing industry should join hands with the other global defense players (from responsible democracies of the world) to bring the quality and trust back in the global supply chain.