Part-1: A Case for Being Brave in Manufacturing

Well, we are all hearing and reading about how India, that is Bharat,  is now ‘Goldi-locked’ for a stupendous growth in the next decade. Everyone’s harping on it. Forget about our stock market stalwarts, even the ‘Gormint’ Aunty is convinced that the next century is ours. 

“India is the place to be”, tweeted our honorable Prime Minister, emphasizing on how reforms have enabled innovation in the country. 

Intent is there. Make In India and the PLI schemes have invigorated the manufacturing scene in the  Pharma/Chem, Textiles, Electronics and Automobile space. There’s been a strong push for building a Semiconductor ecosystem. It is as if we have almost managed to elbow our way into the tight-knit supply chain club. 

But let’s not start popping the champagne just yet. Premature celebrations of our ‘potential’ have been like getting bitten by the same snake in a game of Snakes and Ladders, sending us tumbling down time and time again. 

This time though –  it has to be different. If anything, the stakes are high. Recent geopolitical events have only further amplified the need to be truly ‘Atma-Nirbhar’. 

Despite India’s best efforts to win the “Most Complicated Manufacturing Hub” award with hefty tariffs, archaic labor laws, and a policy framework held together by red, oh sorry – duct tape. Throw in the thrilling game of “Land Acquisition: Bribery Edition,” endless project approvals that take longer than the entire ‘Anupama’ saga, and electricity that costs a bomb. 

Moreover, India has always indulged in the luxury of importing high value added engineering/tech products. 

Source: Azad Engineering RHP

What do we say? It’s no wonder India was the biggest arms importer from 2019-23, gulping down 9.8 percent of the global arms market, despite the sprawling defense R&D and manufacturing scene. 

The book Chip War emphasized on how serious nations like the United States of America used the Weinberger Doctrine to strategically and judiciously use military/space engagements to drive defense related investments. This ultimately helped create an environment where technological and engineering breakthroughs could thrive, solidifying America’s leadership in these critical sectors.

But who can blame our babus in bureaucracy. Everyone likes cream after all. Unfortunately for us as a nation, all the cream is in importing this critical technology – not in making our own stuff.

Perhaps it’s time India shifts its gears from relying solely on low-value add stuff to developing specialized competencies in niche manufacturing segments. Innovation comes in war-time,  and in peacetime. Just to borrow Ritesh Jain’s phrase, India needs to stand-up in this brave new world.  And trust you me, assembling Apple phones is not going to cut it. 

(Check Our Chat with Ritesh Jain on Brave New World By Clicking on the Link Below)

Investing in Change: A Macro Guide to the Brave New World Ft. Ritesh Jain | Smart Sync Services

And oh, before you get offended and do a “Here we go again” at my poor impression of our favorite economist turned politician in disguise – hear me out.

Luckily enough, the suits in government seem to have got their act together, revamping the Defense Acquisition Procedure (DAP) – it used to be called the Defense Procurement Procedure until 2020. The big change? They want to give local industries a leg up over the foreign competition. Good intentions, but will it stick?

It’s wait and watch. Isn’t it?

The Need for Atma-Nirbharta in Defense

Look, these are strange times. We have two wars going on currently, which have dragged on into oblivion for us common folks sitting in India, almost like an endless year-round test cricket match that never seems to reach a conclusion. 

The US surely is courting us with these jet engine deals almost like a French romantic, but fortunately, today’s India is not very easily smitten. Today they need India to counter China, tomorrow they will see India as a threat.

Leave aside the fact that the US is a sanction regime. Judging by their past actions vis a vis India, can we really trust them not sanctioning us again? 

1971, Pokhran and many other stories of United States’ apathy towards India which can be suddenly found popping up in many YouTube podcasts and books by the ex-army and ex-intelligence folks. 

And tomorrow’s wars are going to be that of attrition, and to win you need your own military industrial complex to sustain for long.

Thus,  harnessing critical technologies is the only way out for Bharat if it has to stand up to the challenge of hostile borders on the West and North East along with that in the Indian Ocean.  From AMCA to AirCraft Carriers, Turbo Engines is the puzzle that India needs to solve, and solve it quickly. Because perpetually relying on others for jet engines is a suicide mission from the word go. 

Take this. Our Advanced Medium Combat Aircraft (AMCA) Tejas Program will get the GE414 engine but then it won’t be 100% indigenous as we would still be dependent on the US for this very critical component. Is this desirable? No, right!?

We need an entire engineering ecosystem to thrive in order to bridge the technological gap and that won’t happen if we are content importing phoren maal. 

The DAP strategy today is bearing some fruits though. At this point in time, India’s not just importing – it’s exporting too. Over 85 countries are buying Indian arms, ammunition, and other defense goodies. There are 100 Indian firms hawking stuff like Dornier-228 aircraft, 155 mm Advanced Towed Artillery Guns, Brahmos Missiles, Akash Missile Systems, and more. 

We’ve now got radars, simulators, mine-protected vehicles, armored vehicles, PINAKA rockets and launchers, ammunitions, thermal imagers, body armors, and all sorts of systems, line replaceable units, avionics parts, and small arms components.

But the big hurdle? Cranking up production to meet India’s own needs. 

The government dreams of hitting a $26 billion production target by 2025, but the reality is production isn’t growing fast enough.

The Indian defense industry’s got size but lacks muscle – the technological know-how to design and manufacture major systems and critical parts. They still end up importing the guts of their gear. This tech gap is why the government still loves to license manufacture most of its big-ticket items. Licensed manufacturing gobbles up 58 percent of India’s defense procurement, showing just how deep the dependency on foreign tech runs.

And there you have it, a tangled situation of ambition, dependency, and bureaucratic shuffle. 

Conclusion

But here is how I see it through my limited understanding of the situation. And yes, DRDR/Government know better but would love to know what you think of the below: 

Spending more on R&D > Incentives the brightest minds to stay/come back and better scouting of talent >  Create an ecosystem of component manufacturers and assemblers who are having dedicated production lines capability > Increased number of  Military and  Space Programs to develop these critical technologies on mission mode and testing their efficacy.

Having said that, and to be fair to the current government, Make in India is not merely lip service. Moreover, there is evident bonhomie between the private sector and the government in the defense industry, which will pave the way for a robust ecosystem that is imperative for any growing economy.

The world order is changing and global supply chains are in a flux. Bharat needs to seize the moment. It’s now or never. 

The good thing? Many young companies in India are showing courage and confidence. It’s about time we started ‘building and manufacturing’ things and not rely on imports. There are second order effects of this which will help us in the long run but none will be as consequential  than what Krishna espouses in Gita. 

PS.  @protosphinx is a huge proponent of manufacturing in India.

Source: X/ @protosphinx

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