The Russian invasion of Ukraine will have far reaching consequences on the world order as we know it. Many analysts believe that the inability of the NATO alliance to come to the aid of Ukraine spells the emergence of a new world order based on multiple power centres. India has chosen to walk a tight-rope, keeping lines open to both Moscow and Washington, while not taking sides in the conflict. Pragmatism in such a policy is dictated by India’s close ties with Russia and its heavy dependence on Russian equipment for India’s Armed Forces. India is also closely aligned with the US as a member of the Quad, a four-nation grouping focused on a rules-based order in the Indo-Pacific.
It is to be hoped that the forthcoming talks scheduled at Minsk between President Putin of Russia and President Zelenskyy of Ukraine lead to a ceasefire and eventual withdrawal of Russian forces from Ukraine. The war has already sent energy prices soaring with crude oil prices breaching the USD 100 per barrel mark. After two years of the negative impact of the Covid 19 pandemic on India’s as well as the world’s economy, from which India has just about begun to recover, the fallout of a prolonged war in Ukraine will cast a shadow on India’s growth story. While India, by herself may not be able to exert the required pressure to ensure return of peace in Ukraine, in conjunction with other major powers, it perhaps may be possible to do so.
Looking into the future, it is important for India to achieve a higher level of indigenous defence preparedness to obviate dependencies on other countries, which could limit India’s strategic decision-making options. Technology will remain the game changer, with the technologically advanced nations having a disproportionate influence on the world economy as well as in creating strategic choices. Towards this end, India needs to move on two fronts. First, is to invest in future technologies, especially in the field of Artificial Intelligence (AI), so that it does not have to play the catch-up game. Second, is to make the home environment conducive to the Atmanirbhar growth story, which is receiving full political support, but would require appropriate legislation to perform up to potential as also a very receptive and supportive bureaucracy.
India needs to take a hard look at the Mittelstand model which propelled German industry to world leadership in the small and medium-sized enterprises. These were small family-owned businesses which were supported to become world class enterprises. With the stress that India is laying on the SME and MSME sectors, it would be instructive for India’s political leadership as well as the bureaucracy to see how this model enabled the sector to flourish.
In the defence sector, the government is laying great stress on becoming self-sufficient in defence needs. This is, of course, a work in progress as the customer base for the supply of weapons, ammunition and equipment has a limited market and the lead time for manufacture is very long. There is also a risk involved in such manufacture as despite the heavy investment made by the private sector, there is no surety that the product will have a buyer. But it is here that the SME and MSME sectors can deliver, if provided the right enabling environment, in partnership with one of the bigger firms to supply components and sub components of platforms and weapon systems. In the two defence corridors that are coming up, one in Tamil Nadu and the other in Uttar Pradesh, such enabling of SMEs and MSMEs can contribute greatly to reducing India’s dependence on imports.
The Ordnance Factory Board has been disbanded and the 41 Ordnance factories that came under it have been amalgamated into seven DPSUs (Defence Public Sector Undertakings). This has been a huge step taken by the government, against great opposition from the unions. But the ultimate test will come when the seven DPSUs are able to show a marked improvement in performance. If these units are going to be managed in the same manner as before, with the same lot of personnel, we may not get the desired results to enhance quality, increase manufacture, reduce costs and ensure timely delivery. A new management, perhaps form the private sector which understands and is attuned to a competitive marketplace with a flair for business may be the mantra required to convert these units into great industrial powerhouses. It can be done, if the government and India’s bureaucracy is prepared to provide them an enabling environment, with appropriate regulations where they have the freedom to execute policies in line with the private sector.
Of great import is the decision by the government to export the Brahmos missile to Philippines. This marks a radical shift in India’s defence policy which had earlier been wary of exporting upper end offensive weapon systems. But if the Brahmos missile can be exported, the field is now open to export of all types of weapons and equipment. It is indeed an exciting time for the defence sector and both the public and private sector must do what they can to promote exports. The government of course would have to come up with enabling legislation, but the renewed thrust on defence exports fits in well with the Prime Minister’s vision of achieving defence production capability of USD 25 billion by 2025, of which exports would comprise USD 5 billion. While this may appear ambitious, India has the capability to not just achieve these goals, but to surpass them too. All that is needed is an enabling environment.
Author Brief Bio: Maj Gen Dhruv C Katoch is Editor, India Foundation Journal and Director, India Foundation.