It is not in India’s national interest to continue to run public sector organisations like DRDO if they are inefficient and not meeting their objectives
– Varun Ramachandra and Nitin Pai
Recently, the Defence Institute of High Altitude Research — a Defence Research and Development Organisation(DRDO) laboratory — inked an agreement with Patanjali Ayurveda Limited for a non-exclusive license through transfer of technology on nutritional products.
The agreement was signed under the DRDO – FICCI Accelerated Technology Assessment & Commercialisation programme which “aims to create a commercial pathway to deliver technologies developed by DRDO for appropriate commercial markets for use in civilian products and services.” Previous deals under the programme have been with business houses like Dabur Ltd, Gujarat Fluorochemicals Ltd, Bhilai Engineering Corporation to name a few.
The DRDO is not involved in production of equipment, instead it is primarily responsible for research and development till the transfer-of-technology(ToT) stage. The move to rope in Patanjali to popularise DRDO’s seabuckthorn based nutritional products is well within its mandate. But it must also be noted that many critical projects under DRDO that have a direct bearing on combat preparedness like the Light Combat Aircraft and Kaveri jet engine are delayed by several years.
Therefore, it is important to examine the raison d’être for DRDO in the first place. The organisation was set up in 1958 with the objective of providing the Indian armed forces with indigenous scientific and technological support. In 2015, 57 years after the formation of the DRDO, India continues to rely on imports to meet its domestic defence demands. This clearly indicates a mismatch in the said objectives and the achieved outcomes of the DRDO(and other public sector undertakings that are involved in defence).
In 2007, the government set up a committee chaired by Dr. P Rama Rao to specifically improve the operations of DRDO. The committee’s report suggested a breakdown of the organisation into smaller manageable units along with merging several of its laboratories with other institutions. The committee’s recommendations have been implemented in a half-hearted manner. The DRDO is far from reaching the operational efficiency of similar organisations from across the world and successive governments have continued to spend money, inefficiently, on DRDO.
From a financial point of view, national security is a delicate relationship between the taxpayer and the armed forces. Hence, it is incumbent upon the armed forces to equip itself with the best available technologies, be it domestic or international. In such a scenario, if Indian organisations are unable to meet the armed forces’ requirements it is natural and expected of the forces to look elsewhere to meet its primary goal of national defence.
The operational costs of running an organisation like DRDO run into several thousand crores. If such an organisation is inefficient and not meeting its objectives, it is not in India’s national interest to continue to run these organisations, especially when taxpayers money is involved. The same money can be used elsewhere to meet other national objectives.
Cloaking reforms under patriotism or indigenisation has resulted in a state where India imports large chunk of its equipment, but is reticent to allow FDI in defence manufacturing. The Indian defence establishment too has called for indigenisation to avoid being coerced by exporters in the hour of need, a problem that can be solved by developing strong economic ties with all exporting countries and/or by procuring from countries where the economic ties are already in place. It is worth reinforcing the fact that defence is a sector where anything short of excellence is a failure.
The dogmatic approach towards indigenisation since independence has yielded limited fruit. It has largely resulted in policy capture by public sector undertakings in the name of indigenisation. The net result is that the domestic industry is incapable of meeting India’s defence requirements and the political economy of reforms has ensured that many PSUs are in a rut.
Indigenisation is a lofty goal that is worth pursuing. Until the goal is reached, defence requirements continue to exist. Therefore, the path towards indigenisation need not be studded with inefficient public sector undertakings. Instead, actively allowing private players and FDI in the defence sector can inject competition and contestability. This will also allow Indian industries to acquire the necessary competence to deliver world-class results.
The government must urgently implement the recommendations of the P Rama Rao committee to restructure DRDO. The DRDO must focus on projects of importance and align its project priorities with that of the defence establishment. India can ill afford inefficient institutions for they have far reaching fiscal and social consequences. Moreover, DRDO exists to protect the nation and not the other way around.
A modified version of this piece was translated to Hindi and appeared in BBC Hindi
Featured image credits: The Surya Kiran Aerobatic Team (SKAT) at Aero India 2011 by Ruben Alexander, licensed under creative commons