Why This is the Year to go Big on R&D in Defence Sector

New Delhi: In 1969, the United States Department of Defence (DOD) started funding a communications network called Advanced Research Projects Agency Network or ARPANET. The project, which started as a military one, was decommissioned in 1990. But not before it became the technological foundation upon which one of the biggest breakthroughs of the modern age was built. ARPANET was a precursor to the internet.

Since then, the US has invested heavily in Defence Research and Development (R&D) and other nations, such as China, have been quick to catch on. But India, the sixth-largest defence spender in the world and the largest arms importer, has been slow. As the Modi government aggressively pushes its ‘Make in India’ doctrine in the Defence sector, is 2018 the year to go big on R&D investment? Experts say yes.

“The ARPANET is one such example. There have been numerous examples of how defence sector R&D has benefitted humanity at large. Several military technologies have also been used in the field of medicine and energy generation. Management techniques devised by militaries across the world became the bedrock of top business schools. It was military research that triggered the space race and today, humanity has reached planet Mars. The benefits of R&D in the technological space are undisputed. India has already been left behind in this and now would be the right time to go big on R&D,” said air defence expert Air Vice Marshal (retired) Manmohan Bahadur.

India’s investment in R&D is woefully short when compared to other nations. The 2018 Economic Survey report, which was released on Monday, outlines how far behind India is falling. In 2015, India spent $48.1 billion on R&D. This was 0.8% of the GDP and the country has 156 researchers per million of the population.

These numbers are paltry when compared to the US, which invested $479 billion in 2015 on R&D, which was 2.8% of the GDP, and has 4,231 researchers per million of the population. China, too, has outperformed India on this front. China in 2015 spent $371 billion, which was 2% of its GDP, and has 1,113 researchers per million of the population. While Israel, which invested only $12.2 billion on R&D spends significantly less than India in absolute terms, it is 4.8% of Israel’s GDP. One area in which Israel outperforms India, USA and China is the number of researchers per million of the population, with the number at 8,255.

Another issue plaguing Indian research is that a disproportionate amount of money is spent on government R&D. Of $48.1 billion India spent on R&D, $29 billion, or over 60% of the total, was invested in the government sector. According to Bahadur, that is what is holding Indian research back.

“The government is pouring tons and tons of money into the DRDO (Defence Research and Development Organization), where a kind of Sarkari lethargy has always existed. There is no result-oriented approach in DRDO, where scientists break for Idli-Vada at 11 am and then again for lunch. Instead, the private sector should be encouraged to take over,” said Bahadur.

He added, “In all other countries, private investment into R&D far outstrips those by the government. Take the example of Saab, the Swedish arms manufacturer. Around 15-16% of their profits are pumped into their R&D wings. All other big players, from Lockheed Martin to Boeing, do the same thing. If Indian manufacturers like Tata and Adani are to grow, the government must encourage private investment. The Defence Procurement Procedure 2016 (DPP 2016) eased this process but more needs to be done.”

The ‘Make in India’ doctrine in the defence sector is in its infant stage as of now, but if it is to progress, India cannot depend solely on ‘Transfer of Technology’ (TOT) from foreign defence firms. US-firm Lockheed Martin is partnering with Tata Advanced Systems Limited (TASL) to produce the F-16 fighter jet in India. But a handover of technology from LM to Tata may not materialize as the Indian government hopes.

Abhay Paranjape, Lockheed Martin’s National Executive for India, said, “Every company will have proprietary issues that will need to be addressed between two companies. We are confident that we will be able to resolve that. What we need to protect, we will protect. What Indian companies need to protect, they will also protect. Technology transfer is not just a one-way handover of technology. Indian companies already have a lot of technology that they’ve developed. But how do we take it to the next level, to being a global player? That is where LM has excelled in the past. We have built F16s in the past in multiple countries. We will continue to bring in industries from around the world into India and will continue to expand industries from India into this global supply chain. And Indian industries will become an integral part of the global supply chain for F 16s.”

This imbalance in R&D spending, believes Bahadur, has led to a “technological asymmetry” between India and its rivals. “China has a stellar military industrial complex and we are still struggling to figure out what aircraft we want for our aircraft carrier. It is because China invested in research and we did not. If we are to fix this technological asymmetry, we need to start investing in R&D now. I believe this is the year that we can start,” said Bahadur.