How Much of "Made in India" Defence Is Actually Indian?

[00:00:00] It's protectionism, bang on protectionism. The Americans do protectionism, I don't care one bit if the Indian government needs to take on that position. You've got tariff wars with the Americans, what are you trying to fight for? You're trying to fight for respect on the table today. We're trying to fight for respect on the table today and I think it's a very fair position. But you can learn from Israel, create a super existential threat.

[00:00:20] No, that isn't policy. But how does the Israel induct systems, right? So, if there is 10 American systems, right? 3 or 4 guys will carry the Israeli systems along with the squad. You cannot have Atmanirbhar Bharat as a label or a sticker. I can't buy Israel and put Atmanirbhar Bharat on it. If it has to be Atmanirbhar Bharat, it has to be here, made here.

[00:00:42] It's happened with our missile programs. It does not happen that success comes in immediately. It happens over a period of time. Nobody wants war, but we obviously need to be ready for war. You need to be at war to be at peace and that is a constant. You can't just say I'm not going to go to war and be at peace. It's not going to happen. It's not a single man's call. Hey Vivek, hey Dinesh. Thank you so much for making the time. Welcome to the Bharatvaarta podcast. Hey Roshan. Let me get straight to the point, right? We'll begin with you Vivek.

[00:01:12] Why does India import most if not all of its weapons? When you've been buying Russian aircraft and American aircraft for the last 20 years, you have no option but to keep importing a lot of those pairs. Maybe in the next few years, you may not want to import drones because there are enough guys in India who are kind of working on both the hardware and also the software side. But you can't do much about spares for C-17 or anything. Simple things, right?

[00:01:43] We're spending approximately if the next Rafale deal goes through, we'd have spent about 25 plus another 8 billion on the previous deal. So we're talking about almost 30 to 35 billion in the life cycle cost. We've not spent more than 2 billion on our aircraft engine program.

[00:02:08] Currently on whatever, you call it the cavalry, multiple, whatever we've done. Per se, our total spend on our entire engine development cycle is less than 2 billion. Now, until unless there is a more focused effort to invest an equal amount on what we buy, on what we develop, we'll never catch up. And engine is a gestation period. It doesn't happen overnight.

[00:02:32] You have to persist on it over the next 20 years or next 25 years with a constant inflow of fund and talent coming in. A lot of times, yes, funds can be put in, but talent is another thing. Now, a lot of talent exists. Indians out of India work on engines. Until unless there's also a steady stream of them coming back or bringing them back to work on our programs, it's never going to happen. There is substantial talent here, but also experience not there. Right?

[00:03:02] The guys who, for example, let's say work at United Technologies, Pratt & Whitney, Rolls Royce. These are the guys who should come back into the stream here or, you know, an effort should be made to bring them back to work with the current teams here to develop capability. We can't build a small piston engine yet. We don't have one company in India currently talking about building a four-cylinder horizontally opposed piston engine for a trainer aircraft.

[00:03:28] We still go to Rotax Bombardier or we go to an Avco-Lycomink, which is under ITAR. So, forget jet engines. We have to start with engines that will power the drones, small engines that will power unmanned other aircraft, manned aircraft, surveillance, none of them. So, capability needs to be built exponentially. Investment needs to be exponentially. Most people like to get into services because it's an easy way to start businesses.

[00:03:59] Gestation time is non-existent. You can get to the market in like three to six months. But at the end of the day, you are only delivering, what do you deliver? CAD models for engines, somebody's engines. Or maintenance logs for somebody's engines. But you're not building an engine. So, until and then, as bare bones requirements are met, it will be very difficult to sustain in military industrial complex.

[00:04:24] And that is the policy that needs to be focused dedicatedly on where we take this conflict to. So, the demand is there, but the supply is constrained on many fronts. Mindset, capability, incentives. But do you sense like a vibe shift happening on that front? I mean, given the recent interest, you know, as Vivek as well mentioned, do you see a lot more different startups coming up?

[00:04:49] And more importantly, do you think that they're properly incentivized to do proper R&D, engineering and actually make a business out of it? Different startups can only do so much, right? And there'll be 90% services heavy, 10% on products. You go to any startup in any part of the world. The guy's sensors will still be somebody's sensors. The guys can sit back and code everything they want in the world. But at the end of the day, if you can't see something, what are you going to signal process?

[00:05:19] It's like your eyes. You can't see something, but your brain wants to process. Now, if you see something, you can process. There's a cat or a dog or a bird. But if your eyes are not seeing anything, I can process. It's not going to help me. So the guys who make the sensors have to be made in India. Tomorrow, taps can turn. Somebody can just turn off the tap. You can't do a nap on anything. Whether it's optics, whether metals, it can just shut out.

[00:05:48] I mean, we keep hearing Trump saying simple things like, you know, funny things, whether it's true or not, that I stopped the war kind of thing. He really can. I'm not kidding when he says he can. I mean, he really can. He can just go back and say, I'm going to turn the engines off. What are you going to do? You have an air force left without 200 planes in the next five years. It's that simple for somebody to do that. Right. And then that kind of leverage you never give. Chinese don't give it. Russians don't give it to anybody.

[00:06:16] That's the reason they can sustain conflict over three years, five years. We're not in that situation. We need to, MIC has to grow exponentially. So the startups are all fine, but the startups are not what going to give you capability. It requires an equal commitment from the government, an equal commitment from all the big, heavily invested companies, you know, and you're thinking in a disarray.

[00:06:43] Nobody is cohesively thinking, you know, as a single component of building an aero industrial complex or a, you know, weapons industrial complex. Very few people have that vision and the government is just band-aid. You just buy bits and pieces when you need it, but you're not looking at sustaining a long battle. Right. And we have to get our act together quickly, right?

[00:07:09] I mean, we are in a post-Operation Sindor situation right now. And you said something interesting before we started recording, which is that war is perhaps an eventuality for us at some point in time, given just the way our neighborhood is. Well, it is. Do you want to think any other way? I don't believe so. I don't believe at all. Or rather, let me put it this way. We can throw caution into the wind and not prepare for war. Right.

[00:07:38] But the net result of that is going to be, you know, phenomenal damage to our confidence and our ability to have actually put in so much effort in the course of the last few years in building up a very strong economy. Nobody wants war, but we obviously need to be ready for war. Right. In a country like India with its own geopolitics, if you're not ready for war, you're not doing the job. I mean, the government is not doing the job. The private sector is not doing the job.

[00:08:08] The armed forces are not doing the job. And it is a role of the armed forces at all points in time to be ready for war. It is a job of the military industrial complex to be supporting them with the ability to scale up. Now, you also talked about something when you said the word incentives. Right. Now, I have to tell you something. Right. When Dinesh was talking about the Kaveri engine program and the fact that we've not really invested,

[00:08:33] one of the biggest impediments for growth of the military industrial complex is this obsession with throwing money and getting results. Now, a venture capitalist will very openly state that over 90% of his or her bets are going to fail. Right. It is a 10% which actually gets you across the line and gives you those humongous results.

[00:08:59] Anyone who is a venture capitalist, who is a risk investor saying that I expect to have 100% results should never be in that game. Now, the government is actually a risk investor when it comes to military industrial capability building. You have to be throwing out billions and billions of money into programs which may or may not be giving you results in two years or three years. You should be ready to lose money. You should be ready to lose money with the whole and sole objective of building platforms.

[00:09:27] It does not matter whether you're able to build a missile out of it. But if you're able to build a technology which gives you an edge against your adversary at some point in time by throwing those billions at it and even failing in the course of that, that's perfectly all right. It's happened with our missile programs. It does not happen that success comes in immediately. It happens over a period of time.

[00:09:46] The Indian Navy has managed to do substantially more than most of the other armed forces because of this particular view that we will take control over the tech and we will try and see as to where exactly this leads us to. But if we start thinking that, okay, fine, every one of our projects basically should kind of deliver results within a period of three years or two years, that's not going to happen. Which is why, again, I believe here that startups are not the only solution.

[00:10:10] I believe here that building of the military industrial complex requires nimble operators, guys like a chap coding in his garage. It requires people who've got hardware expertise and who've kind of taken their product from R&D all the way to final production. It requires impetus coming in from Indians who've lived abroad, who've worked with Eru and defense companies outside of India. A lot of that expertise, experience needs to be captured back.

[00:10:39] It requires support from the government of India in the sense that they've got to stop thinking about incentives. In the sense, I put in a billion dollars, I should get so much in return. They're not in there to build up that profitable success story. They're in there to kind of state, I'm willing to lose money to be able to gain an edge. If that edge in war is 1%, it's still worth it.

[00:11:02] One of the things both of us keep discussing in one of our previous avatars, just Karnataka's, just the state of Karnataka's power subsidy is 8,500 crores. The government of Karnataka gives a power subsidy, which means it's not built, is 8,500, about a billion dollars a year. And we don't even put 10% of that into the programs that need that kind of money.

[00:11:28] So for a government, it's not such a big deal to build capability. But then most of the government institutions that are in the military industrial complex, invariably just white label other people's stuff. Because it's an easy way. And it's a good masking for the people in procurement to say, it's a government company supplying to us. But that government supply company is just a glorified agent for another company from another country.

[00:11:57] So he buys it, labels it as a local, white labels it as a local product and puts it in. But you're never going to have that comfort or capability. I mean, the last six months they've been testing a radar from a third country. Does not talk to the missiles we build. It's that simple. Communication from a third country's radar does not talk to the missiles that are built in India.

[00:12:24] So they've spent the last six months debugging each other, trying to teach somebody Hebrew to somebody Hindi. So we have that conflict going on. I mean, I'm just kidding on the terms, but that's what is happening. That what the radar is telling the missile, the missile is not getting it. And what the missile is conveying, the radar is not getting it. So they've gone on this conflict for two years now. Over the last six months, I think it's gotten better. So some progress on it.

[00:12:53] But until you build your radar that talks Hindi to the missile that talks Hindi, you have a problem. That's the other complexity, right? Because whatever you buy has to fit into that platform and an ecosystem. It has to talk to each other. And, you know, small things like, let's say, not small things, perhaps, I mean, critical things like gauges and so on. They matter a big deal. And if you're just going to like, you know, import something, stick a label and sell it, you're not going to be able to service it, maintain it, upgrade it going forward.

[00:13:23] I was talking about mindset, right? That's a nice story to kind of talk about. Yeah, please. Back in 2018, 2019, the two of us were actually, you know, on roadshow mode. For us, roadshows are basically carrying our weapons from unit A to unit B and showing those weapons. And we would have army officers, some of whom are very different today from where they were then.

[00:13:46] And then we've had a few of them coming down and saying, you know, SSS defense has got a full name as well. And that's Stump, Shule and Somapa. Stump and Shule happen to be Germans. But the moment they saw the German name, they said, oh, it's a German company. And the biggest mistake I did at that point in time was saying, no, we're not a German company. We're an Indian company because that very moment, the emotions basically washed off their faces. So you see, mindset plays a very important role. That was a mindset then.

[00:14:15] Today, the same officers over the course of time would come back and then say, I'm proud of you guys. But they don't ever mention the German association anymore. They know we are a 100% Indian company. So mindsets are there. Mindsets are changing. But why do these trials take so long? You know, I mean, four to seven years and multiple agencies, three, four, five agencies involved and so on. I understand these are sophisticated weapons, obviously. And there's a lot at stake.

[00:14:45] Right? Like you say, I mean, if a rifle has to fire 10,000 times, it has to function. Right? So, but why? So, a slight difference here. So when they ride the RFP, they will want it to run like a horse. Carry an elephant load. They do that first. First of all, that barriers are so high. And then we want to make the horse run in Rajasthan and at 50 Celsius. We want the horse to climb 16,000 feet and go to minus 50. Now, you tell me who on the earth will do this?

[00:15:15] And this is something that because there is a scared bureaucrat there who does not want to take the risk of saying... Wants to cover his bases. So, he's going to put you through all the hoops so it doesn't affect him. So, you are going to be fighting weather, elements, you know, all the other things that go in multiple environments and multiple climbs. So, they say, you know, do rainwater.

[00:15:40] One of the first things I think our teams built here was we had to simulate rain in the northeast. So, it's very funny that we have a chamber where we have 20 shower heads pouring water down while the guy is firing just to simulate the northeast. So, coal chambers where you put the weapon for three days at minus 50, then you pull out and fire. So, you build and simulate. You can do it here but for some reason, they have not evolved into that.

[00:16:09] They will want you to wait till it's monsoon in Arunachal Pradesh and then send you there. Or they will tell you to go to another place in Tawang when it's snowing and fire there. When you can do everything in one controlled environment, do all the tests you want, clear it in three days, now it becomes three years. A lot of these negotiations are also like completely lopsided, right? It's almost like, you know, what's yours is ours, what's mine is mine, you know? There is no negotiation, right? And there are guys who say, we don't even want to come to India now in a lot of weapon systems.

[00:16:39] They say, come to our range, you test and you go back. We're not bringing it to India. There are enough people who are going to do it. Someday we're going to do that too. I mean, it's not that, there's nothing wrong with it because when you build capability and you're confident, come to the center, not run hoops over 20 places. So, and they wouldn't tweak a single thing for us. They wouldn't tweak anything for us. It doesn't matter whether it goes high, hot, whatever else it does. They wouldn't tweak it for you. You learn to use it.

[00:17:06] You shut up and use it and go about life. Nobody is going to come back. I mean, for the last 40 years, we've had a sniper weapon in this country. In the armed forces that does not use even a basic bipod. I mean, a hunter uses a bipod today and we've spent 40 years in combat in frontline forces

[00:17:34] who have used weapons that cannot take a scope on it, that cannot take a bipod on it. You keep it on a stone. You can't fit it? No, you can't fit it. It does not have options. We've happily lived with that because somebody shouted down our throat. That's what happens when you're dependent upon foreign owners. Foreign owners. You don't go and evolve to that point. There have been multiple instances where Indian companies have actually felt that we are not given our dues. Is it wrong for us to kind of state that? No.

[00:18:03] I think the reason why we are stating at this point in time is because we weren't the right to say it. But several companies in the past, especially the Ordnance Factories and the likes, don't deserve to say this because they've not done their stuff. It's the same as a parent could be harsh on a child. But once a child has actually said, fine, I'm deserving of this one, then the parent has to recognize it.

[00:18:27] And the only way he can recognize it in effect is by giving them due respect and that opportunity to have their say in critical matters. Right. Now, that's where I have a view here that we have to get out of that mindset where we say, no, no, no. I'm going to have a fashion contest and I'm going to try and make sure that all of you guys in an RFP will compete with each other and all of you guys will be at par with each other and the best one will be shortlisted. Right. We have a different view.

[00:18:56] Our view is if we are good enough, take us out. Right. You don't even buy it. Take 20 weapons of ours. Take it right into the borders. Right. Start using it. If you like it, come back and tell us what you like. If you don't like certain things, come back and tell us what you don't like. We'll see what we can do. But that ought to be the first preserve of an indigenously designed, developed and manufactured weapon.

[00:19:23] We should not have to compete with foreign weapons if there is a past track record of actually putting out a good weapon and getting into international markets. That's our position. It's protectionism. Bang on protectionism. The Americans do protectionism. I don't care one bit if the Indian government needs to take on that position. You've got tariff wars with the Americans. What are you trying to fight for? You're trying to fight for respect on the table today. We're trying to fight for respect on the table today. And I think it's a very fair position.

[00:19:50] I think from 2020, right, we've heard of this. The prime minister himself gave the slogan of Atmanirbar Bharat. After that, we had this defense acquisition council. Then there was IDEX. All of these things have happened. And while the intention is there, maybe the execution has fallen short by a little or by a lot. I mean, you guys will know. Right. So, if you wear the policy hat, what is one thing that you guys would change? I mean, maybe you can take turns. One thing you would change from a policy perspective and one thing you would.

[00:20:21] So, Atmanirbar Bharat should be Atmanirbar Bharat, right? You cannot have Atmanirbhar Bharat as a label or a sticker. I can't buy Israel and put Atmanirbar Bharat on it. If it has to be Atmanirbar Bharat, it has to be here, made here by us, right? Might not be the most efficient one, but it has to be made by us. And ultimately, you will get to the point. I mean, if the Israelis are doing 100 and I'm doing 90% of it, it will take me two more years to get there. But then it has to be made here.

[00:20:49] I cannot, because it's easy and they are willing to hand on something, bring it up and put, you know, part of Atmanirbar Bharat. It's not going to help. We have to do. But it's a very difficult problem as well, right? Because a lot of these needs are very, like it's expedient, right? Like you said, I mean, we could face a… Oh, hold on. If it's expedient, buy. If it's expedient, don't even come across and say Atmanirbar Bharat. Buy and build capable. I'll give you a simple thing, right? Okay. Let's go back.

[00:21:18] I mean, because Vivek mentioned the Navy is the most efficient. Localized, a lot of it they've done. I mean, no doubts about it. It's a lot less riskier than an aeroplane because, you know, you can actually stop a ship and you won't fall down. You can't do that with an aeroplane. You'll bring it down. But with a ship, I can anchor it or I can just go down to throttle and stay there. I'm not going to sink. So the simple things like that is, all right, you have top of the line.

[00:21:44] And today they cost 600 to a billion dollars to build a capital warship, right? That's what it costs to build a destroyer. It'll be anywhere from 600 million to… And we pay the Israelis just for the radar close to 150 million. And the Americans for the engines another 50 million. So there's a lot of components on it. Only the metal is localized. Networking, XYZ, various things are done. But there's still the eyes of the ship or the radars which we buy off the Israelis.

[00:22:13] Though Bell says that they will service it, it just comes in a box. GE gives the engines in a box. Vata Sela from Finland gives them the engines in a box. Now, we have Kirloska, we have Cummins, we have 100 guys, right? So build smaller ships. You might not want to go expeditionary but coast patrol. You need to build on that capability with local engines. They might. And learn from that that how does seafaring work on local engines? What kind of weathering is needed?

[00:22:43] How do you take it forward? I think someday on a casual day I sketched it to somebody and I said, you know, just put two small air defense radars on a metal platform with a few Kirloska engines. And you already have control of 100 square kilometers. You know, it's easy. You don't have to really go back and wait for a billion dollar piece of equipment. But you start learning. Yeah, yeah, you start learning.

[00:23:11] Four diesel engines on it from Kirloska will turn it at 25 knots, not at 30 knots. And two simple radar systems that are built by LRD can go on. But it still gives you a certain area of control. Not wait for 10 years to build a capital ship. What can we learn from ecosystems elsewhere? Because a bunch of these are solved problems, right? I mean, I'm sure that Israel or Turkey or the rest of them would have solved it and would have faced these problems in their own ways.

[00:23:41] And solved it. So what can we learn from, let's say, Israel, which has a super existential threat, right? And it's in a state of war perennially. What you can learn from Israel? Create a super existential threat. No, that is in policy. But how does the Israel induct systems, right? So if there is 10 American systems, right? Three or four guys will carry the Israeli systems along with the squad.

[00:24:08] So that's how they build experience and capability. Right? So if there is nine people in a squad, the guys are carrying, say, there will be one American machine gun and one Israeli machine gun in the squad. And over a period of time, the Israelis get comfortable with their weapons. They start removing the American systems out. So that's the way our guys should start inducting.

[00:24:31] The other interesting thing about Israel is that Israel is such a small country, but they've developed a very solid ecosystem in certain areas. For example, electronics, electronic warfare, drones, counter drones. They may not be so much on aerospace, but a lot of very, very highly fast-paced evolving sectors. They've managed to kind of put out some really interesting products.

[00:25:00] That's also come because of their system whereby they groom guys immediately after school and college to kind of be participatory members of the military forces. And some of those guys who kind of are part of some elite groups like the 8200 Goulback, join hands with their seniors, their co-workers, create new companies. Those new companies basically integrate with other larger OEMs to kind of scale production of those products.

[00:25:31] We've had instances when we go across to three Israeli booths and we see the same product in this guy's booth painted white, this guy's booth painted black. Right? You wouldn't see that very often in India. Right? So it's that way of working with each other saying, hey, listen, we've got this product. Let's go out and sell this to the rest of the world. Let's make great business out of it. So we'll end the podcast with Dinesh giving a clarion call to Indian engineers on why they should build in defense. So go for it, Dinesh.

[00:26:00] No, I gave you the call. I mean, I told you what they need to do. It's the hardest problem. So it deserves the brightest of our folks to get together. That's exactly what we said. We said the same thing that more people should be thinking offensively. Yeah. And taken a more offensive position in this space. And nobody is going to give you technology. You can be the best of the friends. Nobody will give you anything. Everybody protects it more than they protect gold. So not a single company will give you.

[00:26:30] They'll give you a product to keep, but nobody is going to give you technology. Simple as that. Whatever monies you give as DOT, nobody is going to give you. You need to be at war to be at peace. And that is a constant. You got to keep at it. You can't just say, I'm not going to go to war and be at peace. It's not going to happen. It's not a single man's call. It takes two to tango and the other side is not going to let you be in peace. So you got to be involved to be in peace. And that is something that you need to build capability for.

[00:27:01] Right. Okay. On that note, we'll call a close to the podcast. But this was amazing. Thank you so much for the work that you guys are doing. And all the best for everything that you have coming up. Thanks. Thanks. Thanks for coming. And always nice talking to you. Thanks. Thanks.