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Wednesday, June 1, 2011

Indigenising defence - the 70:30 fallacy

Defence indigenisation has long been more a Ministry of Defence (MoD) slogan than reality. Defence Minister A K Antony pays regular lip service to reversing the 70:30 ratio: reducing the foreign component of Indian defence from 70 per cent to 30 per cent. In practice, indigenisation has been, with apologies to Greta Garbo, an illusion, wrapped in a fallacy, cloaked in deception.
The empirical reality of “indigenisation” is evident in the Indian Navy, the only service that pursues indigenisation systematically (the Indian Air Force and the Army talk the talk but oppose indigenisation in practice, demanding aircraft, tanks and guns now, not ten years down the line). The navy takes justifiable pride in building most of its warships in Indian shipyards, but a closer examination reveals that indigenisation is only skin-deep. Defence shipyards have developed the crucial skills needed for designing and constructing sophisticated warships, and for harmonising myriad sensors and weapons into an integrated battle management system. But there is little headway in indigenising the multiplicity of components and systems that are the vital innards of a battleship.




Consequently, India’s four defence shipyards – the flagship Mazagon Dock Ltd, Mumbai (MDL); Garden Reach Shipbuilders & Engineers, Kolkata (GRSE); Goa Shipyard Ltd (GSL); and the newly acquired Hindustan Shipyard Ltd, Visakhapatnam (HSL) – must necessarily look overseas for the engines, gas turbines, propulsion systems, gearboxes, generators, hydraulic systems, air-conditioning and countless other systems, which add up to the bulk of the cost of modern warships.



These are all lost opportunities for India’s private sector companies, which could be building these systems as their route into the lucrative business of defence production. Examine the figures. From the navy’s budget of Rs 21,000 crore this year (all figures rounded off), almost 60 per cent, or Rs 12,000 crore, is earmarked for capital expenditure. Of this, Rs 4,000 crore will be disbursed directly to foreign shipyards that are constructing Indian warships, while Rs 8,000 crore will be paid to Indian shipyards. On the face of it, that would appear like a healthy 66 per cent indigenisation rate, close to Mr Antony’s target.



Unfortunately, only a small share of this goes to the Indian shipbuilder. MDL retains just 25 per cent of the cost of each warship it produces, with 75 per cent being paid to foreign suppliers for the systems mentioned above. GRSE pays out 65 per cent and GSL remits 55 per cent abroad, not because they are better at indigenising but because their vessels use lower-end technology that is available in India.



The shocking statistic is that India has a 100 per cent indigenisation rate in jungle boots, blankets and similar low-tech equipment. But in critical technologies, we import 85 per cent of our needs. And in warship-grade and aerospace-grade components, we have indigenised just 5 per cent of our requirement; 95 per cent still comes from abroad. An example is Hindustan Aeronautics Ltd’s Dhruv helicopter, designed and integrated in India, but 90 per cent foreign in physical content.



This regrettable situation exists largely because the MoD, particularly its Department of Defence Production (DDP), has failed to coordinate and sponsor the development of indigenous capability. Warship builders still import even warship- grade steel, the toughened alloy that comprises the basic structure of a modern battleship. This is not because the technology is beyond us. Years ago, India’s public sector metallurgical establishments – the Defence Metallurgical Research Laboratory; Mishra Dhatu Nigam; and Steel Authority of India Ltd – developed and manufactured warship-grade steel (termed D 40S), which has been used in the navy’s reputed Shivalik class frigates. But cross-ministerial coordination is needed to produce the relatively small volumes required for warship programmes while remaining profitable for both steel makers and shipyards. Essar Steel had offered to produce warship steel, subject to some conditions. But the MoD has preferred to continue reliance on import.



In 2003 the navy addressed the lack of depth in indigenisation with a “15 Year Indigenisation Plan”, which was subsequently revised up to 2022. This forecasts the warship programme’s requirement of equipment and systems, hoping for import substitution by bringing in the private sector. A similar initiative last year, broadened to all three services, was the DRDO’s “Technology Perspective & Capability Roadmap”, which details the technologies that the military requires and urges the private sector “to offer firm commitments in partnering the MoD in developing contemporary and future technologies as well as productionalising [sic] equipment required by the Armed Forces”.



But these useful baseline documents are only a starting point for an indigenisation thrust. Private sector corporations that are interested in defence production would still require handholding and funding for their initially non-productive R&D. The funding is available – each year the MoD has been earmarking some Rs 2,000 crore for “Make” procedure projects, without a single rupee having ever been paid out – but nobody in the MoD has taken clear ownership of such an initiative.


It is time for the defence ministry to step up to the plate. They have already identified 61 critical technologies – especially materials and components that can be used across a broad range of sub-systems and systems – that India badly needs for developing higher technological capabilities. A nationally synergised effort is needed, which must also explore obtaining specific technologies through the offset route.
We have learnt how to swim at the deep end of the pool, developing the complex abilities needed to design and integrate warships, aircraft and tanks, without developing the broader research and industrial ecosystem that sustains a defence industrial base. It is time to deepen and broaden indigenisation, by developing the materials, components and sub-systems that will not only substitute defence imports, but also provide technological “trickle down” to energise the national industrial base.

Need to Regulate Indian Surrogacy Industry

The advances in human reproductive sciences have made it possible for couples and others to have biologically their own children who otherwise cannot for a number of reasons. This has given rise to the concept of surrogate mothers. Surrogacy is a method of assisted reproduction. More common form is IVF/Gestational surrogacy in which the surrogate child biologically belongs completely to the social parents. The other type is gestational surrogacy where the surrogate child is genetically related to the male parent and the surrogate mother.




India has emerged as a favourable destination for surrogacy and its Assisted Reproductive Technology (ART) industry has evolved into a 25-billion rupee business annually, with Law Commission describing it as “a gold pot”. The phenomenal rise in surrogacy in India has been due to it being cheap, socially accepted. Moreover, surrogacy has emerged as a preferred option because of complicated adoption procedures.



Foreigners including NRIs seeking surrogacy for various reasons, both medical and personal, have also contributed to the rise of the Indian surrogacy industry predominantly because of it being at least ten times cheaper than in their respective countries. No statistics exist on the number of foreign couples coming to India to have a child. But ART clinics say that their numbers have been appreciably growing.



In India surrogacy heralded with the delivery of its first surrogate baby on June 23rd, 1994, but it took eight more years to draw world attention to it when an Indian woman in 2004 delivered a surrogate child for her daughter in the U.K. Surrogacy as a medical process has matured over the years. India has become a booming centre of a fertility market, partly surreptitiously, and today there are an estimated 200,000 clinics across the country offering artificial insemination, IVF and surrogacy. They call it Assisted Reproductive Technology (ART).



There is at present no law governing surrogacy in India, eventually the activity including renting a womb (commercial surrogacy) is considered legitimate. In the absence of any law the Indian Council of Medical Research (ICMR) in 2005 issued guidelines for accreditation, supervision and regulation of ART clinics in India. But the need for legislation became pressing with ICMR guidelines being often violated and reportedly rampant exploitation of surrogate mothers and even cases of extortion.



At the instance of the Indian government an expert committee has drafted a legislation known as Assisted Reproductive Technology (Regulation) Bill, 2010 for legalizing surrogacy. The proposed legislation earlier floated in 2008 envisages legalizing commercial surrogacy as well. It defines a ‘couple’ as two persons living together and having a sexual relationship and as such, following Delhi High Court’s verdict on homosexuality, gives gays besides the singles the legal right to have surrogate babies. It also stipulates the age of surrogate mother to be within 21-35 years and limits her deliveries to five including her own children. The surrogate mother will have to enter into a legally enforceable surrogacy agreement as per the proposed legislation.



Foreign couples including NRIs seeking surrogacy in India will have under the proposed law to submit certificates that their country recognizes surrogacy as legal and also that the surrogate child after birth would get their country’s citizenship. The Law Commission of India in its 228th Report on “Need for legislation to regulate assisted reproductive technology clinics as well as rights and obligations of parties to a surrogacy,” has by and large supported surrogacy in India, but is not favourable towards commercial surrogacy. The Commission said, “It seems that wombs in India are on rent, which translates into babies for foreigners and dollars for Indian surrogate mothers.”



But according to an infertility specialist in Mumbai the Commission favouring altruistic surrogacy only may not be the solution either. “It will be very difficult to get altruistic surrogates and relatives could end up being pressured to become surrogates,” says the specialist. This could be a reality in view of poverty, illiteracy and the lack of power that women have over their own lives in India.



But many legal experts are of the view that the draft Bill is a step in right direction as it will end the present confusion and help regulate the functioning of the IVF centers and ensure quality check and accountability of ART clinics. It is expected to protect the interests of both the surrogate mother and child and help the commissioning parents to realize their dream of having their own baby more or less hassle free.



There are worries too as to what impact it will have on the society in terms of commercialization. Poor illiterate Indian women with the lure of money could be forced into repeated surrogate pregnancies risking their lives. There are also ethical and moral issues as well as the human dignity involved besides questions about the rights of surrogate mother. As such the draft legislation on surrogacy needs to be debated threadbare in social, legal and political circles as well as by the civil society before it becomes a law.