Transfer of Defence Technology Understanding the Nuances and Making It Work for India
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Transfer of Defence Technology Transfer of Defence Technology Understanding the Nuances and Making it Work for India Kevin A. Desouza KNOWLEDGE WORLD KW Publishers Pvt Ltd New Delhi Copyright © 2020 Institute for Defence Studies and Analyses, New Delhi All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without first obtaining written permission of the copyright owner. Disclaimer: The views expressed in this book are those of the author(s) and do not necessarily reflect those of the Institute for Defence Studies and Analyses, or the Government of India. Institute for Defence Studies and Analyses No. 1, Development Enclave, Delhi Cantt. New Delhi-110010 Phone: +91-11-26717983 Website: www.idsa.in ISBN 978-93-89137-17-0 Hardback Published in India by Kalpana Shukla KW Publishers Pvt Ltd 4676/21, First Floor, Ansari Road Daryaganj, New Delhi 110002 Phone: +91 11 23263498/43528107 Marketing: [email protected] Editorial: [email protected] Website: www.kwpub.com Printed and bound in India The content of this book is the sole expression and opinion of its author, and not of the publisher. The publisher in no manner is liable for any opinion or views expressed by the author. While best efforts have been made in preparing the book, the publisher makes no representations or warranties of any kind and assumes no liabilities of any kind with respect to the accuracy or completeness of the content and specifically disclaims any implied warranties of merchantability or fitness of use of a particular purpose. The publisher believes that the contents of this book do not violate any existing copyright/ intellectual property of others in any manner whatsoever. However, in case any source has not been duly attributed, the publisher may be notified in writing for necessary action. To my wife, Veena For helping me to be critical and forthright. Contents Abbreviations ix List of Figures, Tables and Annexures xv Acknowledgements xvii Prologue xix 1. A Brief Historical Perspective 1 2. Understanding the Nuances 7 3. Aligning ToT to National Goals 38 4. Implementing PToT 46 5. Exploring All Avenues 91 6. Making it Work for India 126 7. Putting it All together 198 Epilogue 210 Annexure I 213 Annexure II 215 Index 228 Abbreviations ALH Advanced Light Helicopter AMRC Advanced Manufacturing Research Centre (UK) AoN Acceptance of Necessity AoT Absorption of Technology APCTT The Asian and Pacific Centre for Transfer of Technology ASSOCHAM The Associated Chambers of Commerce and Industry of India B&M Buy and Make (route in the DPP) B&M(I) Buy and Make (Indigenous) (route in the DPP) B2D Build to Design B2P Build to Print B2S Build to Specifications CII Confederation of Indian Industries CKD Completely Knocked Down (kits) CLA Component Level Assembly (stage) CNC Contract Negotiation Committee COTS Commercial Off-The-Shelf (equipment) CSIR Council of Scientific and Industrial Research CToT Complete Transfer of Technology CVD Core Value Determinants D&DToT ToT required to Design and Develop a system DAA Defence Acquisition Agency DDP Department of Defence production DG Director General x • Transfer of Defence Technology DGAQA Directorate General of Air Quality Assurance DGQA Directorate General of Quality Assurance DIB Defence Industrial Base DoI Department of Indigenisation DOMW Defence Offsets Management Wing DPP Defence Procurement Procedure (Indian) DPrP Defence Production Policy (Indian) DPSUs Defence Public Sector Undertakings (Indian) DRDO Defence Research and Development Organisation (Indian) DTIC Defence Technology Information Centre DTOC Defence Technology Oversight Committee DToT (Limited) ToT required to carry out minor design deviations while manufacturing a system DTTAC Defence Technology Transfer and Absorption Centre DTTI Defence Trade and Technology Initiative (with the US) EOI Expression of Interest (by the Indian government on the acquisition of a system) FDI Foreign Direct Investment FF Fully Formed (systems) FICCI Federation of Indian Chambers of Commerce and Industry FM Fast Moving ( spare parts) FMS Foreign Military Sales (US) G2G Government to government (agreements or negotiations) GIPC Global Intellectual Property Center (U.S. Chamber of Commerce’s) GITA Global Innovation and Technology Alliance (Indian) GoI Government of India HAL Hindustan Aeronautics Limited Abbreviation • xi HQ IDS Headquarters of the (Indian) Integrated Defence Staff IACs Information Analysis Centres (US) IC Indigenous Content ICT Information and Communications Technology IDDM Indigenous Designed, Developed and Manufactured (systems) IGMDP Integrated Guided Missile Development Programme IISER Indian Institute of Science, Education and Research IIT Indian Institute of Technology IM Indigenous manufacture (kits) IP Intellectual Property IPL Itemised Price List IPO Initial Public Offerings IPR Intellectual Property Rights ITAR International Traffic in Arms Regulations (United States) JV Joint Venture (between two agencies or firms) JV CP Joint Venture for Co-production JV-CD-CP Joint Venture for Co-development and Co- Production LCA Light Combat Aircraft LLTR Light-weight Long-range Transportable Radar LM Licensed Manufacture LP Licensed Production LRSAM Long Range Surface to Air Missiles MBT Main Battle tank MDP Major Defence Partner MEMS Micro Electro-Mechanical Systems MoD Ministry of Defence (Indian) MOTS Military Off-The-Shelf (equipment) MRL Manufacturing Readiness level MRLS Manufacturer’s Recommended List of Spares xii • Transfer of Defence Technology MSME Medium, Small and Micro Enterprises MToT(M) ToT required to maintain a system MToT(MRO) ToT required to overhaul a system MToT(R) ToT required to repair a system OEM Original Equipment Manufacturer OF Ordnance Factory (Indian) OToT ToT required to operate a system P2P Private (firm) to Private (firm) P2S Private (firm) to State-run (agency) PA Production Agency (which could be an OF, DPSU or private firm) (Indian) PIO Person of Indian Origin PToT ToT required to produce (or manufacture) a system R&D Research and Development RFI Request For Information (on a system or its technology) RFP Request For Proposal (for supply of a system or its technology) RoI Return on Investment S&T Science and technology SCOMET Special Chemicals, Organisms, Materials, Equipment and Technologies (list) (Indian) SHQ Service Headquarters (of the Indian Army/Navy/ Air Force) SKD Semi-Knocked Down (kits) SODET Society of Defence Technologists (Indian) SP Strategic Partner (Indian defence firm entrusted with strategic responsibilities by the Indian government) SQR Services Qualitative Requirements (of defence systems) SRI Self-Reliance Index STI Science, technology and Innovation (strategy) TAI Turkish Air Industries Abbreviation • xiii TEC Technical Evaluation Committee (of systems being considered for acquisition) TMPP Technology Maturity and Productionisation Path ToT Transfer of Technology TRIPS Trade Related aspects of Intellectual Property Rights, an international agreement administered by the WTO TRL Technology Readiness Level TT Technology Transfer TTLC Technology Transfer Life Cycle TTSC Technology Transfer Steering Committee UNCTAD The United Nations Conference on Trade and Development USML United States Munitions List VA Value Addition (in systems produced through ToT in India) VC Venture Capitalists WA Wassenaar Arrangement WE directorate Weapons and Equipment Directorate (of the Indian Army) WTO World Trade Organisation List of Figures, Tables and Annexures Figures Figure 2.1: The Technology S Curve 17 Figure 4.1: Inter-relationship between Clusters of Objectives 59 Figure 4.2: Fixing of desired technology level for ToT 61 Figure 4.3: Processing and Execution of ToT Cases in the Indian Defence Acquisition System 85 Figure 5.1: The Technology Maturity and Productionisation Path 100 Figure 6.1: Opening up more Modes for ToT through the DPP 133 Figure 7.1: Proposed Internal Structure of the DAA 205 Figure 7.2: Positioning the Proposed DAA in the MoD 207 Tables Table 2.1: Assigning of ToT variant definitions 13 Table 2.2: Life of Technologies 19 Table 4.1: Categories of items and their technology deliverables in PToT 52 xvi • Transfer of Defence Technology Table 4.2: National Goals Conveyed by the DPP and DPrP 57 Table 5.1: Modes/Avenues of ToT along the TMPP 119 Table 6.1: Comparison of conventional modes of technology transfer for defence systems 130 Table 6.2: A Template for Selecting Optimal Modes of ToT 134 Table 6.3: Possible Ceilings beyond which, the ToT Proposed can be Considered Cost-Prohibitive 137 Table 6.4: Some Cross-Cutting Technologies 158 Annexures Annexure I: The Asian and Pacific Centre for Transfer of Technology (APCTT) 213 Annexure II: The Life Cycle Approach for Planning and Implementing a Technology Transfer Project 215 Acknowledgements I am grateful to the Almighty, for providing me the opportunity and capability of serving my country through this research work. The Indian Army, for sponsoring me for a two-year research fellowship and the Institute for Defence Studies and Analyses, New Delhi for welcoming and supporting me through it. In the IDSA, I owe my gratitude to Brig Rumel Dahiya (retd), Shri Vinod Misra, Shri Amit Cowshish, Gp Capt Vinay Kaushal (retd), Dr. Laxman Kumar Behera, Maj Gen Ranjit Ghosh, Maj Gen Alok Deb (retd) and the Director General, Shri Jayant Prasad for their helpful support. I am also grateful to Dr. G. Balachandran, Col P.K. Gautam (retd) and Gp Capt (Dr.) Ajey Lele (retd), who provided me with additional insights and guidance in my work. I am grateful to many members of the Indian defence technology community as well for sharing their insights and experience. I would like to extend my thanks to Dr. S. Guruprasad, Dr. Parimal Kumar and Shri A.D. Rane of the DRDO, and Shri Umesh Singh of OFB and officers of HVF and EF Avadi, GCF Jabalpur and their supporting DGQA agencies. I would also like to acknowledge the support I received from the DPSUs, officers of BEL Ghaziabad and BEL Chennai. And among the private industry, I would like to extend my thanks to AVM Pradeep Singh (retd), Rear Adm Pritam Lal (retd), Dr.