It doesn't end here. India must prepare for mightier neighbours

The Print

13-05-2025

Nationalising HAL in the early years after Independence was a mistake. Walchand Hirachand had built a great company, which decayed after nationalisation. On the other hand, countries like Brazil, once nowhere on the horizon, started making better aircraft than India. While HAL has not been privatised, it is now a strong player—no longer a forlorn child abandoned on the outskirts of Bengaluru in Jalahalli.
Kudos to former defence minister Manohar Parrikar, who made these two acquisitions possible after a decade of atrophied indifference. Kudos to Rajnath Singh, who was not churlish and did not abandon his predecessor's good steps. Instead, he built upon them and carried on bravely, soberly, and sensibly with multiple modernisation programmes. Kudos to the Modi government, too, which had the courage to reverse decades of stupidity in defence procurement. It has sought to revitalise the DRDO and breathed new energy into HAL.
Iran may have dismissed the S-400 in favour of domestically developed weapons, but the Russian missile system certainly worked for India in the recent escalation with Pakistan. And thank god for the Rafales. The country might have been weak without them, as it was some years ago.
Meanwhile, ISRO has been acquiring one strength after another.
The government also bit the bullet on ordnance factories. They are no longer 'departmental' outfits bogged down in bureaucratic miasma. They are companies subject to external operating guidelines and financial judgements. And this was done despite stubborn, Luddite trade union obstruction. However, it pales in comparison to the open and welcoming involvement of the private sector in defence manufacturing.
Today, we are finally seeing the emergence of world–class defence manufacturing units in India, whether it is from the Tatas, Mahindra, L&T, the Adanis, or Bharat Forge. The country is also giving rise to startups producing muscular drones, thermal imaging, and even low–publicity items such as body armour.
These developments give us insight into what we have to do next.
Learn from Roosevelt
About 50 years ago, Indian automobile companies required foreign collaboration. We simply could not design our cars. Today, the Tatas, the Mahindras, and Maruti (more an Indian company than a Japanese MNC) conceptualise, design, and produce world–class cars. And therein lies an opportunity.
During World War 2, US President Franklin Roosevelt appointed former head of General Motors, William Knudsen, to figure out how to make military equipment for the country. He did not advocate the creation of public sector behemoths. Instead, he sought a series of public-private partnerships. It turned out that private auto manufacturers did make better tanks than those specified by the inertia-laden Pentagon bureaucracy. The US out-innovated and out-produced not only Germany and Japan, but the whole world. It won the war and ensured enduring dominance.
India should learn from this anecdote, especially because it is already on a similar path. It can become the world–class provider of missiles, air defence systems, robot soldiers (future wars may not involve human soldiers), and multi-purpose drones. Software will be the critical factor in the battlefields of the future, and India can gain a competitive advantage. Thanks to ISRO, it can become the cheapest provider of satellite coverage and related technologies. We have been told that we can never make aircraft engines. What about a 1,000-crore or even a 10,000-crore public-private initiative to crack this problem?
Of course, it is not that simple. We have to fix our administrative logjams. A complex RFI/AFP/tender process with delays in its DNA will never work. But Parrikar and Singh have shown that India need not forever be a prisoner to its bureaucratic apparatus. It can tap into its human capital wisely. Engineering colleges across the country may be invited to apply to become defence technology partners in research and in placements for their graduates.
There will be problems. Two out of 50 selected colleges will get themselves into the list by bribing someone. The media will make a lot of noise—this will have to be ignored. Because there are 48 good partners. President Roosevelt never took the position that there was no corruption in the procurement process during World War 2. The important thing is what was achieved. India can, and it must, support startups. And many of these might fail. But instead of a national witch hunt over these failures, we need TV coverage for our successes.
Another myth is that even if India has software skills, it lacks manufacturing skills, which are important for producing robots and drones. This is simply not true. We have the skill; we have merely not scaled like China due to a hostile business environment. In Coimbatore alone, there are dozens, probably hundreds, of foundries that closed down due to electricity issues in the pre-Kudankulam days.
The skills exist. The entrepreneurs exist. The administration just has to see them as partners and not adversaries, which is what the tax bureaucrats are doing today. If even 10 Indian manufacturing entrepreneurs scale, the country would be in good shape.
Also read: Pakistan can't test India's strategic patience anymore. The doctrine has flipped
Establish escalation dominance
India must focus on creating an ecosystem that dominates the technologies of future wars. By doing this, it can achieve strong 'escalation dominance', a much-abused phrase of recent origin. And the country can achieve this through meaningful public-private partnerships, and by taking risks (for instance, not getting hysterical if a startup fails).
India must continue to export—this will ensure that its equipment is as good or better than what the world makes. In the 1980s, we imported world–class artillery from a small country like Sweden. Within the next five years, we should be in a position to sell next–generation military equipment to Sweden.
At that stage, the declining economy of Pakistan will face immense trouble. India grows at a rate of 6-7 per cent. Pakistan grows at 0 per cent. India's fiscal deficit is manageable and declining. Pakistan's fiscal deficit is astronomical and growing. Indian reserves are in the hundreds of billions. Pakistani reserves are technically negative. India's national debt is reducing. Pakistan is drowning in debt. In India, inflation is quite low. In Pakistan, it is out of control.
Islamabad has neither the money nor the human capital to invest in technology. In future encounters, India must establish escalation dominance more than in recent times.
It does not end here. One day, we will perhaps be confident enough to resist mightier neighbouring powers.
Jaithirth 'Jerry' Rao is a retired entrepreneur who lives in Lonavala. He has published three books: 'Notes from an Indian Conservative', 'The Indian Conservative', and 'Economist Gandhi'. Views are personal.
(Edited by Prasanna Bachchhav)