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Mainstream, VOL LV No 40 New Delhi September 23, 2017

Looking for a model Military Industrial Complex (MIC)

Saturday 23 September 2017

by Bhartendu Kumar Singh

Military power, along with economic power, constitute the great power edifice in contem-porary international relations. Yet, India’s attempts to consolidate its great power status is stymied by a sick and sterile military industrial complex (MIC). The helplessness was best reflected in a recent statement by a senior service official that even Pakistan’s MIC is much better than India’s!

True, India’s MIC is in state of atrophy. But Pakistan’s MIC is not the ‘right model’ for several reasons. First, it is incapable of meeting Pakistan’s weapons requirement and the dependency factor is the same like that of India. More than 60 per cent of its weapons imports come from China. China is jointly developing fighter jets, tanks, frigates etc. with Pakistan offsetting the latter’s proven deficiency in defence innovation. Second, Pakistan’s MIC gets preferential treatment due to militarisation of the political process, resource distribution and institutional dominance of the military. The Chairman of the Pakistan Ordnance Factories is a Lt General. Military also dominates other defence industrial units like the Pakistan Aeronautical Complex, Heavy Industries Taxila and Karachi Shipyard and Engineering Works. The nuclear programme is under the total grip of the Army. Third, the militarised MIC gets hidden subsidies in defence production. Even then, many items are being produced at a higher rate than in the international market. These include spare parts for weapons purchased from China. Fourth, due to militarisation of politics and economy, Pakistan has suffered in the defence vs development debate where military expenditure is being subsidised through the extractive MIC system. It has also engendered a parallel economy run by military officers, benefiting themselves. Ayesha Siddiqa’s classical book, Military Inc: Inside Pakistan’s Military Economy (Penguin, 2007 & 2017) highlights the menace of the ‘khaki capitalism’, nicknamed as ‘milbus’. It refers to the military capital that is used for personal benefit of military fraternity, especially the officer cadre.

Who else then we look for learning good practices? The US along with Europe could be one example since they account for almost 80 per cent of global arms sales. They are based on the ‘free market’ principle and the state chips in only through an assured market based on competitive procurement system. Hitherto, most companies based in these countries are leaders in innovation and cross-breeding of civil-military technologies and command a world-wide market. Outside this group, emerging producers like Japan, Australia, and Brazil also have done well by developing an export-based MIC and hold many lessons for us.

But probably the best role model would be China that has firmly established itself as the third largest arms exporter of weapons systems. This is indeed surprising since China’s MIC was struggling till the end of the twentieth century. The leadership’s late decision to push for military technology reforms paid dividends and today the Chinese MIC is a phenomenal success story (within two decades) producing ships, aircraft, submarines and ensuring a frontal lead for China in cyber-warfare technology. Richard Bitzinger in his just published book, Arming Asia: techno-nationalism and its impact on local defence industries (Routledge, June 2017), has concluded that techno-nationalism has been the driving force in MIC reforms in China more than any other country since self-sufficiency (or autarky) was a critical national security objective. Also, the Chinese leadership perceived and pursued the issue as ‘status’ in the evolving hierarchy of great powers.

Israel is another country for replicating the lessons into India’s MIC. Yaakov Katz and Amir Bohbot, in their book, The weapon wizards: how Israel become a high-tech military superpower (St Martin’s Press, January 2017), showcase that from drones to satellites, missile defence systems to cyber warfare, Israel is leading the world. The most important thing is that Israel has developed in its arms trade ‘new weapons’ and retrofitted ‘old ones’ so that they remain effective, relevant and deadly on a constantly changing battlefield. Israel remains a top end arms exporter with weapons alone constituting about 10 per cent of its overall exports. It invests about 4.5 per cent of its GDP on research and development (R & D), 30 per cent of which goes to the military. A country of only eight million people and without natural resources, Israel has the third largest number of companies after the US and China. Israel is, as the authors conclude, a ‘disruptive innovator’ and a laboratory for the rest of the world.

It is this failure of innovation that India mourns in its MIC, characterised by regressive growth. This is rather unfortunate since India spends a huge money on arms imports, due to domestic MIC’s inability to meet quantitative and qualitative requirements. A failed MIC is not only embarrassing but also robs the country of ‘strategic autonomy’ and constrains its performance as a regional security actor.

India has an opportunity to fix its problems since military modernisation is quite in vogue all over Asia along with reforms in domestic MIC. The focus is on creating a twentyfirst century defence industry and defence economy characterised by overarching target of self sufficiency. India’s military catch-up and leapfrogging is possible only through engineering the right kind of model and dovetailing the same in Indian circumstances. While many laudable initiatives have been taken in the last couple of years, more needs to be done to pull India’s MIC in the right direction.

The author is in the Indian Defence Accounts Service. The views expressed here are personal.

ISSN : 0542-1462 / RNI No. : 7064/62