New defence reforms to help make the Indian Defence Sector `Atmanirbhar’

Finance Minister (FM) Nirmala Sitharaman’s briefing on measures to be executed by the govt to power the state out of a descent into an economic whirlpool that would suck the country into the quicksand of a tough depression was a shade different from the three previous tranches announced. In that, it had its prime focus more on structural reforms during a few industry sectors that have the potential to get wealth, employment and strategic benefits within the end of the day . In the fourth tranche that Sitharaman outlined, the main target was on defence production, aerospace including MRO, space, nuclear energy , coal and minerals. within the Defence production area, long pending issues are addressed by the govt . Hopefully, the execution of those proposals are going to be fast-tracked. Two major defence-related issues that the FM addressed deserve greater analysis. These are the aspects of FDI within the defence sector and therefore the functioning of the behemoth Ordnance Factory Board (OFB). Both issues are periodically addressed by governments from time to time, however, political compulsions haven't permitted taking the bull by the horn and getting it to plough profits into the system. As far as FDI cares , the underlying argument that must be perceived is most of the critical technologies that we require for creating weapon platforms that build our military strength isn't there with us. Yes, there are quantum jumps in space technology, manufacturing world-class guns, a couple of enviable helicopter models, some sorts of ammunition, missiles then on, however, we still don't have the technology for many decisive warfighting capabilities. As far as new technologies that would prove decisive tomorrow, we are nowhere there in AI, robotics for military use, cyber warfare, and communications. In fact, we are importing rifles, have did not produce a world-class tank, don't have technologies for contemporary drones or swarms, haven’t produced precision ammunition; the list being endless. So far, only 49% of FDI was allowed through the automated way. 100 per cent FDI is allowed after due government approvals. Sitharaman announced a rise within the automatic route to 74 %. 49 available did not garner the advantage that we had expected. 74 you'll trigger a number of the highest global companies within the defence and aerospace sector to line up shop in India. However, it might be prudent to count the chickens after they hatch. Keeping in sight the exit strategies that global majors may ultimately resort to in China, the mixture of a 74 % FDI policy, availability of an outsized population of technically qualified manpower and lower wages could make India a beautiful destination. the dimensions of the Indian market, and will we be ready to sustain our modernisation plans, also offer an enormous domestic market. Sitharaman also announced corporatisation of the Ordnance Factory Board (OFB). The OFB is over 200 years old. it's 41 ordnance factories functioning thereunder . The attempt is to undertake corporatisation and usher inefficiency in these establishments by converting into one or more corporate establishments. These establishments will remain fully owned by the govt just like the other public sector units. The corporatisation of the OFB has been one among the transformative ideas that the present government was to execute within the first 100 days of its being in power. Notwithstanding so high a priority, the response from union leaders of those establishments to the FM’s announcement yesterday, are cryptic. Three major unions who claim to represent a huge majority of the 82,000 strong workforces, are scheduled to announce their action plans today. A battle is definitely visualised. However, such a battle are going to be faced anytime that we plan to modernise legacy systems in most sectors. Hopefully, all parties are going to be objective, and as long as workers’ interests aren't trampled upon, measures that promise efficiencies in areas of production, quality and costs are going to be firmly steered through. 'Atmanirbharta' may be a welcome philosophy and wishes to be put in practice. Should the measures proposed by the FM actually progress, `atmanirbharta’ are going to be enhanced. However, critical requirements and operational capabilities required to satisfy external threats will have to remain at the highest of the priorities, especially keeping in sight the delicate global strategic environment created by Coronavirus induced challenges.