Why India needs private investment to boost defence.

India is now one of the world's biggest spenders on defence and the world's largest importer of military equipment and munitions. Adjusted for purchasing power parity, India was the world's ninth-biggest spender on defence in 2012, according to the World Bank. It spends a full 2.5% of its GDP on the military, a tad higher than the world total of 2.4%, though lower than America's 3.8% of GDP.

Yet, unlike the US, most European nations or even China, India does not have a thriving domestic defence industry of its own. The tendency to import weapons, military aircraft, ships and other hardware from abroad is worrying. The sloth and lack of expertise in developing indigenous defence industry is well documented, from the inability to roll out Tejas aircraft in sufficient numbers, to the sloppy quality of homemade Insas assault rifles.

To boost the domestic defence sector, the government needs to open it up to private investments, including overseas investors who can bring modern technology to the table. Today, there is a debate about whether 100% FDI should be allowed in defence. That misses the point of what is relevant for India's needs. Hardware like guns, ships, aircraft and so on can be made with private investments and FDI without much concern for security.

However, when it comes to weapons that rely on proprietary software and complex algorithms, India has to keep its cards close to its chest. It cannot afford to buy systems whose kill switches, or disabling codes, are with foreign suppliers. Such things have happened before. During the Falklands war of 1982, Margaret Thatcher reportedly bullied the French president to reveal the kill switches of French-supplied Exocet missiles that the Argentines were using against British warships, and disabled the Exocets. India cannot take such risks.

Source : economictimes.indiatimes.com