Singh’s call to industry leaders to spend more on R&D is understandable, but whether the industry will rise to the occasion is a moot point.
Last week, on two separate platforms, Defence Minister Rajnath Singh pointed out the dire need for India to metamorphose from being an ‘imitator’ in Research & Development to a ‘leader’ in developing futuristic technologies that could deal with pressing global security concerns.
One of the platforms was the Defence Research and Development Organisation (DRDO)’s Academia Conclave in Delhi, where Singh highlighted the need for deepened collaboration between DRDO and academia. If realised, the cross-movement of scientists between DRDO and other institutes could produce results greater than the sum of its parts. One of the means suggested was that the DRDO, which has an extensive R&D infrastructure with over 50 laboratories across the country, could make its labs available to academia for research purposes. Not only would this move benefit institutions financially, but it would also provide DRDO with skilled researchers from the academic space, he said.
At the annual session of the Confederation of Indian Industry (CII), where the theme was ‘Future Frontiers: Competitiveness, Technology, Sustainability and Internationalization’, the defence minister reiterated the ‘imitator’ issue and also stated that R&D could help create technologies that improve the utilisation of available resources and act as a force multiplier. He sought greater participation by the private sector in defence R&D and urged it to make inroads into new and hitherto untouched sectors/products/goods and services.
He listed robust R&D infrastructure and substantial financial and human capital as the key requirements for making India a technology leader. Singh also said that the government had taken several appropriate steps to achieve this goal – covering banking policy, regulatory policy, provision of funds, labour policy, as well as education and health policy. Such initiatives would provide a playfield for the country’s youth and the industry to work collaboratively and take R&D to greater heights.
This article looks at one critical aspect of defence R&D – financing.
India’s R&D budget
India was ranked 40th among 132 countries in the Global Innovation Index (GII) 2022 by the World Intellectual Property Organization (WIPO), a specialised agency of the United Nations. The index was released in January 2023 and provides a yardstick for measuring an economy’s innovation performance. The index uses various measures to rank countries, such as institutions, human capital, research, infrastructure, market sophistication, knowledge and technology outputs. India was ranked 40th last year and 81st in 2015, which means it has certainly made progress in R&D at the national level.
In defence, R&D capital outlay is approximately Rs 12,850 crore for 2023-24, in contrast to the Budget Estimate (BE) in 2022-23 of Rs 11,982 crore, which amounted to an increase of 7.2 per cent. However, revenue allocation has increased by 11.4 per cent. It has witnessed a Compound Annual Growth Rate (CAGR) of 6.07 per cent over the last decade while the capital budget has seen a CAGR of 5.5 per cent.
Undoubtedly, several steps like the Innovations For Defence Excellence (IDEX) scheme have been initiated. But such programmes cannot be expected to develop state-of-the-art technology. It is a different ballgame altogether and would require a synergised national effort on a scale that certainly cannot be met by the total amount India spends on its R&D. According to GII 2022, this amount is 0.7 per cent of the country’s GDP and an area where globally, India ranks 53rd.
It is obvious that the national and defence R&D budget will require much more allotment if the defence minister’s call for becoming a leader from an imitator is to get anywhere near its realisation. With allocation challenges intact, any major increase in the defence budget seems unlikely in the near future. Therefore, Singh’s call to industry leaders to spend more on R&D is understandable, but whether the industry will rise to the occasion is a moot point.
Corporates are profit-driven entities
A CII Report, entitled, ‘Harnessing Private Sector Investment in R&D, admitted that so far, it is mostly the government that has been investing in R&D, and there was a need for the private sector to step up and play a role in increasing India’s R&D spend to 2 per cent of the GDP. The recommendations included promoting and strengthening Public Private Partnership (PPP) Models; increasing R&D with other countries; strengthening the funding ecosystem; increasing investments in education; promoting expenditure on R&D as investments; developing incubators on the PPP model; and private sector shifting to India- centric R&D.
The corporate sector is understandably a profit-driven entity. It will put in the money only if, in its estimation, a reasonable return on investment is assessed.
Certainly, such opportunities exist in the defence sector, especially as security demands rise. But to expect that the corporate sector will pursue the development of cutting-edge technologies for deployment in the defence sector may be unrealistic. The process of R&D is, in essence, a journey into the unknown. It is a risk that business moguls will be reluctant to take, especially when opportunities exist along other routes. At best, the private sector can be expected to keep to the path of investment in R&D, which would produce items that are in demand nationally and globally.
R&D financing an uphill task for govt
For the development of advanced technologies in the defence sector, the Indian government will have to rely mostly on its own finances while leveraging its R&D infrastructure and human capital that reside in large measure outside the government. It should also seek international cooperation, which it is attempting, like through the India-US ‘Initiative on Emerging Technology’ launched by the US president and the Indian prime minister on the sidelines of the Quad (Quadrilateral Security Dialogue) summit in May 2022. This aims to elevate and expand the countries’ strategic technology partnership as also the defence industrial cooperation between their governments, businesses, and academic institutions. But to expect the US corporate sector to part with the knowledge that resides at the core of its critical technologies would be an unfeasible ask. The impact is that the US or any other country would retain its ability to keep India strategically dependent.
For India’s strategic planners, it is better to identify those critical technologies derived from its strategic vision based on a long-term view of its political and security destination. Developing an engine for fighter aircraft is a prime example that must be pursued with the idea of ‘whatever it takes’. With its limited resources, India’s priority should be deploying R&D to capitalise on identifying accessible capabilities that must be shaped by national military strategy and doctrine. Armed/suicide and surveillance drones are yet another example. The focus must be derived from the types of war India must be prepared for.