THE Modi government is set upon privatising defence production in the country. Both foreign and Indian private companies are being invited to enter defence production and the manufacture of hi-tech weaponary. This has serious implications for national sovereignty and the future course of the country.

The ministry of defence has finalised its new policy for defence production. It has decided to identify six Strategic Partners (SPs) from domestic Indian companies. These companies will partner foreign weapons manufacturers to build defence production enterprises in India.

The policy sets out four segments in defence production which will be open to the strategic partners from the private sector. These are helicopters, single engine fighter aircraft, submarines and armoured fighting vehicles.

Already some of the big corporates have entered the defence production sphere such as the TATA group, Reliance India Ltd, Reliance ADAG, Mahindra group, Larsen & Tubro, Bharat Forge and Ashok Leyland – Hinduja group and others. It will be from these companies that the initial six strategic partners will be chosen.

The blueprint for privatisation was set in motion with the announcement by the government of allowing 100 per cent foreign direct investment in defence production. In the name of indigenisation of defence production, tie-ups between domestic private companies and foreign multinationals to set up joint production enterprises are envisaged.

At present the bulk of defence production is undertaken by public sector enterprises and ordinance factories. The government has already delicenced 60 to 70 per cent of the production reserved for the public sector. It is planning to allot 25 per cent of the defence PSUs turn over to the private sector in the first phase.

As the private sector expands in defence production, the privatisation of the defence PSUs and disinvestment will continue apace. For the first time a defence PSU, the Bharat Earth Movers Ltd (BEML) is being privatisaed through a “strategic sale” of 26 per cent equity to a private party. The BEML is one of the largest public sector defence production enterprises. Handing over this vital enterprise to the private sector will be a clear signal to both foreign weapons manufacturers and the domestic private sector that there is a bonanza in arms manufacturing open to them in India.

The issue of national sovereignty is very much relevant in the context of the privatisation of the defence production sector. The entry of foreign arms manufacturers must be seen in the background of the Indo-US military cooperation agreement and the Logistics Exchange Agreement signed with the United States. The interlocking of the US and Indian armed forces and their “interoperability” will dictate the pattern of defence production in the country in which the big corporates both foreign and Indian will be involved.

Already the ADAG Reliance Defence & Engineering Company has entered into a repair and servicing agreement for the US 7th Fleet warships at the company’s Pipavav shipyard. This comes under the logistics exchange agreement wherein US naval ships can dock at Indian ports for maintenance and servicing. The nexus of Indian corporates in arms manufacturing with the US armed forces raise disturbing questions about encroachment on India’s sovereignty and vital defence and strategic policy making.

The entry of big corporates into arms manufacturing will lay the basis for a “military industrial complex” in India. The burgeoning corporate involvement in weapons production will bring in an altogether new calculus to India’s strategic and foreign policy making.

It is well known that the big arms manufacturers-armed forces-State nexus in the United States provides the impetus for militarism and the US wars of aggression. India by adopting a similar pattern of corporate arms manufacturers-State nexus will be fuelling demand for more armaments and aggressive national chauvinism. The privatisation of defence production in India is thus fraught with serious consequences. It will distort the very priorities of national development and endanger social welfare.

The privatisation of defence production must be halted. Instead there has to be indigenisation of defence production by expanding the scope of defence production in the public sector through technological upgradation and enhanced research and development.

(May 24, 2017)