- Offset dilution in defence, a flawed policy turn
- What’s in India-US defence deals
- The many bright spots on India’s innovation horizon
Offset dilution in defence, a flawed policy turn
Context: Recently, the government diluted the “offset” policy in defence procurement, reportedly in response to a Comptroller and Auditor General (CAG) of India’s report tabled in Parliament last month.
GS Paper 3: Effects of Liberalisation on the economy; Changes in Industrial policy & their effects on industrial growth.
- What is an offset policy? And how is it expected to boost domestic capabilities? What lessons can we draw from a similar system in the aerospace industry? 15 marks
- Foreign direct investment in the defence sector is now said to be liberalised. What influence this is expected to have on Indian defence and economy in the short and long run? 15marks
What is defence offset?
Defence offset means “a supplier places work to an agreed value with firms in the buying country, over and above what it would have brought in the absence of the offset.” Hence under defence offset, a foreign supplier of equipment agrees to manufacture a given percent of his product (in terms of value) in the buying country. Sometimes this may take place with technology transfer.
Why defence offset is needed?
The developing countries like India lack an industrial base and research and development (R&D) facilities (which take a long time to mature). Therefore, defence offset helps to get defence equipment and advanced technologies in order to safeguard national interest.
Defence offset policy of 2016: The defence offset policy is a part of Defence Procurement and Procedure (DPP). Developing indigenous defence sector is the major objective of the defence. Major feature of the 2016 offset policy is that:-
- It increases the threshold of defence offset to Rs 2000 crore from the current level of Rs 300 crores under “buy” and ‘buy and make” categories. This means that only those purchase of above Rs 2000 crore that the foreign company has to ensure 30% domestic value addition in India.
- It created a new category called ‘Indian Designed Developed and Manufacture (IDDM)’ and it has been given the highest priority.
- Giving training to Indian professionals in high tech skills for promoting defence research and development.
Objectives of Defence offset policy: The key objective of the Defence Offset Policy is to leverage capital acquisitions to develop Indian defence industry by
- Fostering development of internationally competitive enterprises.
- Augmenting capacity for Research, Design and Development related to defence products and services.
- Encouraging development of synergistic sectors like civil aerospace and internal security.
Effectiveness of offset defence policy:
- According to the recent CAG report mentioned above, between 2007 and 2018, the government reportedly signed 46 offset contracts worth ₹66,427 crore of investments. However, the realised investments were merely 8%, or worth ₹5,457 crore.
- The technology transfer agreements in the offsets were not implemented, failing to accomplish the stated policy objective.
Therefore on September 28, the government has diluted this policy further. Henceforth, the offset clause will not be applicable to bilateral deals and deals with a single (monopoly) seller, to begin with.
In this respect, the defence offset policy may help the country to develop and support the indigenous defence manufacturing sector therefore India needs to re-conceive or re-imagine the offset clause in defence contracts with stricter enforcement of the deals, in national interest, and in order to aim for ‘Atma Nirbhar Bharat Abhiyaan’, or a self-reliant India.
What’s in India-US defence deals
At 2+2 meeting next week, the two countries will look to push intelligence sharing pact BECA. With key deals LEMOA and COMCASA already signed, what does it mean for defence, particularly in light of LAC standoff?
GS Paper 2: Regional, Global groupings & Agreements (involving and/or affecting India), Effect of Policies & Politics of Developed and Developing countries on India
- “What introduces friction into the ties between India and the United States is that Washington is still unable to find for India a position in its global strategy, which would satisfy India’s National self- esteem and ambitions” Explain with suitable examples. 15 marks
- The goal of 2+2 dialogue is to establish a diplomatic, yet fruitful, conversation between the two countries’ respective heads of defence and external affairs. Analyse this statement in context of India US relations. 15 marks
What is 2+2 dialogues:
2+2 dialogue explained A ‘two plus two dialogue’ is a term — adopted in foreign parleys — used for installation of a dialogue mechanism between two countries’ defence and external affairs ministries. To put it simply, ‘two plus two dialogue’ is an expression used to indicate that two appointed ministers from each country, the ministers of defence and external affairs in this case, will meet up to discuss the two countries’ strategic and security interests.
Important agreements under 2+2 dialogues: Following agreements will be discussed under 2+2 dialogues:-
- The Basic Exchange and Cooperation Agreement
- The Logistics Exchange Memorandum of Agreement
- The Communications Compatibility and Security Agreement
What is BECA?
The Basic Exchange and Cooperation Agreement largely pertains to geospatial intelligence, and sharing information on maps and satellite images for defence. For example, anyone who sails a ship, flies an aircraft, fights wars, locates targets, responds to natural disasters, or even navigates with a cell phone relies on geospatial intelligence.
Significance of BECA:-
- India can use the US’s advanced geospatial intelligence and enhance the accuracy of automated systems and weapons like missiles and armed drones.
- BECA will provide Indian military systems with a high-quality GPS to navigate and missiles with real-time intelligence to precisely target the adversary.
What is LEOMA?
The Logistics Exchange Memorandum of Agreement was signed between India and the US in August 2016. It allows the military of each country to replenish from the other’s bases: access supplies, spare parts and services from the other country’s land facilities, air bases, and ports, which can then be reimbursed.
Significance of LEOMA?
- This is extremely useful for Navy-to-Navy cooperation, since the US and India are cooperating closely in the Indo-Pacific.
- It will enhance the trust between India and US.
What is COMCASA?
The Communications Compatibility and Security Agreement was signed in September 2018. It allows the US to provide India with its encrypted communications equipment and systems so that Indian and US military commanders, aircraft and ships can communicate through secure networks in peace and war. To explain in lay terms again, it is like WhatsApp or Telegram for the two militaries, which is safe and real-time communication is possible hassle-free.
Significance of COMCASA:-
- India will get communication security equipment from the US which facilitate “interoperability” between their forces — and potentially with other militaries that use US-origin systems for secure data links.
Other dimensions related to India US relations:-
Economic relations: The United States seeks an expanded trade relationship that is reciprocal and fair. A burgeoning trade relation can be witnessed through:
- Energy exports: In 2018 India purchased 48.2 million barrels of U.S. crude oil, a significant increase from 9.6 million in 2017.
- Service exchange: In immigration, Indians continue to dominate the high-skilled visa category, at times making up over 70 percent of H1-B visa holders.
International Cooperation: India and the US cooperate closely at multilateral organizations, including the United Nations, G-20, Association of Southeast Asian Nations (ASEAN) Regional Forum, International Monetary Fund, World Bank, and World Trade Organization.
Strategic Convergences: Balancing China’s rise in the international system, and more particularly in the Indo-Pacific region, is a clear strategic convergence between India and the United States.
- India and the U.S. seem determined to counter China’s maritime expansion, which is seen as a threat to their trade routes in the Indian and Pacific Oceans.
- Co-operation at Forums like QUAD (India, the United States, Japan and Australia), to secure the IndoPacific and countering Chinese accession in Asian geo politics.
Recognition of Indo-Pacific Realm: The term “Indo-Pacific region” has now replaced the term “Asia Pacific region” in the American diplomatic lexicon.
- The Trump administration has consistently described India as one of its major allies in the Indo Pacific region.
- It renamed the former U.S. Pacific Command as Indo-Pacific Command, emphasizing the strategic linkage between the Indian and Pacific Oceans.
Enhanced capability through American equipment:
- LAC— C-17 Globemaster III for military transport,
- Boeing’s Chinook CH-47 as heavy-lift helicopters,
- Boeing’s Apache as tank-killers,
- P-8I Poseidon for overland reconnaissance,
- Lockheed Martin’s C-130J for airlifting troops.
Irritants in India-US Relationship:
- India-Russia Relations: India’s decision to buy the Russian made S-400 Triumph missile defence system despite threats of American sanctions through the Countering America’s Adversaries through Sanctions Act (CAATSA) is a case, where Washington’s priorities clash with India’s interests.
- The US wants India to move away from Russian equipment and platforms, as it feels this may expose its technology and information to Moscow.
- India is wary of Pakistan’s deep-rooted ties with Pentagon, and Washington’s dependence on Rawalpindi for access to Afghanistan as well as its exit strategy.
- Trade ties: Trade ties are also a source of tensions. India has been a huge beneficiary of the Generalized System of Preferences (GSP) program of USA, which has been ended recently by the Trump administration.
The US appears to have a positive vision of strategic convergence between India and the US and fully appreciates the need for two countries to work together not only for mutual benefit but also for the sake of global peace.
The many bright spots on India’s innovation horizon
The Indian innovation of zero (Brāhmaphutasiddhānta of Brahmagupta) fundamentally reordered history. The novel coronavirus pandemic provides an opportunity for similar reordering for posterity.
GS Paper 3: S&T developments and everyday applications & effects; Awareness in fields of IT, Space, Computers, Robotics, Nanotech, Biotech, IPR issues. Achievements of Indians in S&T; Indigenisation of technology & development of new technology.
- Artificial intelligence can be used effectively for social empowerment, inclusion, and transformation in key sectors such as health care, agriculture, finance, education and smart mobility. Examine the statement in context of India’s achievements in development of artificial intelligence. 15 marks
- Scientific research in Indian universities is declining, because a career in science is not as attractive as our business operations, engineering or administration, and the universities are becoming consumer oriented. Critically comment 15 marks
What is innovations?
Innovation is a recombinant and brings tangential benefits through products and services that may not even have been its initial purpose. For example, The founders of Twitter had set out to make a platform for people to find podcasts or Instagram was first intended to be a sign-in application.
What is artificial intelligence?
Artificial intelligence refers to the ability of the machines to perform human intelligence processes like thinking, perceiving, learning, problem-solving and decision making.
Examples related to artificial intelligent technology:-
- Robotics and Automation: Robots can be programmed to perform high-volume, repeatable tasks normally performed by humans.
- Natural Language Processing (NLP) is the processing of human language by a computer program. For example, spam detectors look at the subject line and text of an email in order to decide whether it is junk.
- Pattern recognition is a subset of machine learning that seeks to identify patterns in data. For example, a machine learning program can differentiate cats from dogs among 1000 images of cats and dogs through pattern recognition like face, whiskers, etc.
- Machine vision is the science of giving computers a vision by capturing and analysing visual information using a camera, analog-to-digital conversion, and digital signal processing.
Applications of artificial intelligence:-
- Self-driving Cars: AI algorithms are one of the primary components that facilitate self-driving cars to make sense of their surroundings, taking in feeds from cameras installed around the vehicle and detecting objects like roads, traffic signs, other cars, and people.
- Digital assistants and smart speakers: Siri, Alexa, Cortana, and Google Assistant utilise artificial intelligence to convert spoken words to text and map the text to certain commands.
- Translation: Deep learning created a revolution in services such as Google Translate.
- Facial recognition: Facial recognition is one of the most prominent applications of artificial intelligence.
- Medicine: In the medical field also, we will find the wide application of AI. Doctors assess the patients and their health risks with the help of artificial machine intelligence. It educates them about the side effects of various medicines.
- Agriculture Sector: AI can be utilised to predict advisories for sowing, pest control, utilisation and efficiency of farm machinery, weed removal, early disease identification, harvesting, and grading.
- Business sector: In order to take care of highly repetitive tasks – robotic automation is applied which perform faster, effortlessly and tirelessly than humans.
- Education sector: Artificial Intelligence can make certain educational processes automated like grading, rewarding marks, etc. thus giving educators more time.
- Cyber Security: In the 20th conference on e-governance in India it was discussed that AI has the capability to strengthen cybersecurity ecosystem in India and should be explored further.
- Smart Cities and Infrastructure: AI is used to monitor patronage and accordingly control associated systems such as pavement lighting, park maintenance.
- Mining sector: Artificial intelligence and the science of robotics can be put to use in mining and other fuel exploration processes.
- Defence Sector: Artificial Intelligence (AI) based tools would aid the defence forces constructively in areas such as decision support, sensor data analysis, predictive maintenance, situational awareness, accurate data extraction, security, etc.
Concerns related to artificial intelligence?
- Job losses: Replacement of humans with machines can lead to large-scale unemployment. Unemployment is a socially undesirable phenomenon. People with nothing to do can lead to the destructive use of their creative minds.
- Robot bosses: If you have an issue with your current human boss, be thankful that he isn’t a cold, emotionless machine because AI is already being used to monitor employee productivity.
- Human error: Although AI can virtually remove human error from processes, it can still exist in the code, along with bias and prejudice.
- High cost: Creation of artificial intelligence requires huge costs as they are very complex machines. Their repair and maintenance require huge costs.
Examples related to India’s innovations:
- Chingari:- It provides video communication tools and MapMyIndia.
- Setu: It is building a bridge to bring banks to people.
- Yelo: It is offering neo-banking payment and money transfer services online for workers in the gig economy.
- Niramai: uses an AI-based thermal imaging portable tool that carries out non-invasive breast cancer screening for women for early detection.
Innovation has the potential to build a future where AI will transform education and health care, machine learning and blockchain will make commerce robust and resilient, clean energy will drive our economy, gene-drives would exterminate invasive and harmful species, gene-editing would help us bring back extinct species and reinvigorate depleted ecosystems, quantum computing will raise our processing capability to resolve challenges which seem insurmountable and augmented, and virtual reality will optimistically change the way we interact with the physical world.