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Mainstream, VOL LII No 30, July 19, 2014

FDI in Defence: Some Questions

Sunday 20 July 2014, by Barun Das Gupta

Union Finance Minister Arun Jaitley in his Budget speech has said that his government was raising the Foreign Direct Investment (FDI) cap in Defence from 26 per cent to 49 per cent. (He is also the Defence Minister.) Worrying as this piece of information is, what is more worrying is that he has not indicated which specific sectors in defence production will be thrown open to FDI and Foreign Technological Participation (FTP). The people have a right to know where exactly foreign manufacturers will be allowed in India’s defence production.

For instance, India is developing and adding to its arsenal of ballistic missiles and in future warfare missiles will play a major, if not a decisive, role. The Agni V with its range of 5000 plus kms has already raised China’s hackles. In March this year, India first secretly test-fired its most potent submarine-based ballistic missile (SLBM) from an undersea platform. (The news came out much later.) It is named K4 and has an effective strike range of 3000 kms. It has given India the ability to nuclear-bombard any target on land three thousand kms away. Once it is mated with our indigenously built Arihant nuclear submarine (and the submarines now at various stages of construction and will join the fleet in the next few years) India’s ‘Nuclear Triad’ will be in place. Nuclear triad means a country’s ability to launch nuclear strikes from land, air and sea.

Secondly, a missile, once launched, requires two types of guidance—the in-flight guidance and the terminal guidance. The in-flight guidance is provided by the Global Positioning System (GPS) consisting of 24 US satellites orbiting the earth. And the information provided by the GPS to other countries is not cent per cent reliable. Military experts say: “After all GPS satellites already offer differing categories of accuracy to the US military as against other users. Total denial, should operational necessities dictate, is probable.” (Emphasis mine — B.D.G.)1 In simple language it means that a missile launched to hit a particular enemy target may be fed with misleading data by the GPS and directed elsewhere.

As India’s reliance on missiles increased, she was faced with a daunting task—building an alternative and solely Indian GPS. It was a daunting task both in terms of technological expertise and in terms of the massive investments required. Thanks to the sustained efforts of her dedicated community of scientists, India has taken the first, but decisive, step toward having its own GPS. Last year, the Indian Regional Navigation Satellite System 1A (IRNSS-1A) was launched from Sriharikota.

With the launch of this satellite, India has forced its entry into the exclusive club of those few countries that have or are building their own navigation systems. These systems, like the GPS, cannot be relied upon in times of war. Russia has already put in place its own navigation system (GLONASS), the European Union is developing GALILEO and China BeiDou (or COMPASS). Newspapers have reported that the IRNSS will consist of seven satellites—three in geo-stationary and four in geo-synchronous orbits. It will cover an area of about 1500 kms around India with a 20-metre accuracy. But gradually the area of the coverage will expand as India takes the subsequent steps to having a full-fledged GPS. Will the NDA Government allow foreign investment and foreign technology in these highly sensitive sectors?

India is worried by the rising strength of the Chinese Navy which aims at dominating the Indian Ocean Region (IOR). The Indian Navy has undertaken two massive projects to protect the two flanks of the Indian subcontinent—the eastern coast and the western coast. The project on the east coast in Andhra Pradesh near Vishakha-patnam, the headquarters of the Eastern Naval Command, is named Project Varsha. It is specifically tasked to counter the Chinese Navy. Project Seabird, on the western coast near Karwar is to enhance India’s naval strength in the western coast. Details of the two projects have been kept under wraps. Project Seabird has been called the Indian Navy’s ‘most ambitious project’. Both projects will have well-protected shelters for the safe berthing of a large number of our warships.

In Project Varsha, there will be underground shelters to protect our nuclear submarines both from surveillance by spy satellites and aerial bombardment by enemy aircraft. This project is believed to have been undertaken keeping in view China’s huge underground nuclear submarine base at the southern end of the Hainan Island.2

Will foreign investment and participation be allowed in such sensitive projects as well ?

There are 41 ordnance factories under the Ordnance Factories Board. The possibility of utilising and widening their capacities by induction of capital and expertise should be explored to reduce our dependence on foreign technology. India’s community of scientists and technologists can do wonder if they are given the necessary support by the government. One shining example of this is the Param supercomputer. In the eighties India was trying to buy the Cray supercomputer from the United States. The US was delaying the deal on one excuse or the other. Ultimately it refused to sell the Cray. The then Prime Minister, Rajiv Gandhi, asked Indian scientists to accept the challenge and come up with a solution. In a very short time, they built the Param supercomputer with was even better that the Cray. The US rued its decision of denial.

If the Modi Government is bent on FDI in defence, it should take the people into confidence as to what sectors this will be allowed. National security cannot be compromised.


1. National Security: Military Aspects by Vice-Admiral V. K. Nayar, Air-Marshal B. D. Jayal, Lt.-Gen. V. K. Singh, R. V. Suri, Maj.-Gen. Afsir Karim. Rupa, New Delhi, p. 58.

2. The Times of India, March 26, 2013.

The author was a correspondent of The Hindu in Assam. He also worked in Patriot, Compass (Bengali), Mainstream. A veteran journalist, he comes from a Gandhian family and was intimately associated with the RCPI leader, Pannalal Das Gupta.