IASbaba’s Daily Current Affairs – 31st December, 2015

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IASbaba’s Daily Current Affairs – 31st December, 2015

INTERNATIONAL

TOPC: General Studies 2

• Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests. 
• Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

 

India Russia ties: New energy in old friendship

• Recently India and Russia completed their 16^th annual summit in December,2015.
• Relations with Russia are a key pillar of India’s foreign policy, and Russia has been a longstanding time-tested partner of India.
• India-Russia ties have acquired a qualitatively new character with enhanced levels of cooperation in almost all areas of the bilateral relationship including security, trade and economy, defence and science and technology.

The recent indo- Russian agreements:

• Beyond 6 nuclear power reactors at Kudankulam, Russia welcomed progress in identifying second site in India for additional 6 nuclear reactors
• Inter-governmental agreementfor building Kamov-226 helicopters under Make In India
• Joint Study Group for studyingpossibility of hydrocarbon pipeline system connecting Russia and India
• Pact between Rosneft and ONGC Videsh Limited for acquiring 15% stakeby OVL in Rosneft’sVankorneft oilfields and discussions for further stakes in future
• Direct trade in diamonds between Russia and India, and creation of a Special Notified Zone at the Bharat Diamond Bourse
• Finalised pactto issue six-month multiple entry tourist visas, based on reciprocity
• MoU between GLONASS and Centre for Development of Advance Computingfor cooperation in commercial applications through integration of Russian and Indian satellite navigation systems

Courtesy: Business Standard

How can the recent agreements boost India Russia ties?

1. A series of defence acquisitions announced in the works will put Russia back on top of military suppliers to India, a spot taken by the U.S. and Israel for more than five years.
2. The deal for 200 Ka-226T Kamov helicopters will become the first big Make in India project, which had been only on paper so far.
3. By investing time in the CEO summit that included several Indian players in the energy and defence sector, India and Russia have shown a desire to involve the private sector in areas that only saw government-to-government deals.

India Russia ties:

1. Defence cooperation

• India has longstanding and wide-ranging cooperation with Russia in the field of defence.
• India-Russia military technical cooperation has evolved from a simple buyer – seller framework to one involving joint research, development and production of advanced defence technologies and systems.
• BrahMos Missile System, Joint development of the Fifth Generation Fighter Aircraft and the Multi Transport Aircraft, as well as the licensed production in India of SU-30 aircraft and T-90 tanks, are examples of such flagship cooperation.

2. Economic cooperation

• Enhancing trade and economic cooperation between India and Russia is a key priority for the two governments.
• Bilateral trade during in 2014 amounted to US$ 9.51 billion, with Indian export amounting to US$ 3.17 billion (an increase of 2.6 % over 2013) and imports from Russia amounting to US$ 6.34 billion (decline of 9.2 % over 2013).
• Major items of export from India include pharmaceuticals, miscellaneous manufactures, iron & steel, apparels, tea, coffee and tobacco.
• Major items of import from Russia include defence and nuclear power equipment, fertilizers, electrical machinery, steels and diamonds.
• Hydrocarbons is an active area for exploring cooperation between the two countries.

3. Nuclear energy

• Russia is an important partner in peaceful uses of nuclear energy and it recognizes India as a country with advanced nuclear technology with an impeccable non-proliferation record.
• Kudankulam Nuclear Power Plant (KKNPP) is being built in India with Russian cooperation. KKNPP Unit 1 became operational in July 2013, and attained full generation capacity in June 2014, while its Unit 2 is in the process of commissioning in the later part of 2015.
• India and Russia have signed a General Framework Agreement on KKNPP Units 3 & 4 and subsequent contracts are under preparation.

Way ahead

• It will take more than defence or power deals, though, to give the India-Russia relationship the depth and significance it wishes to have.
• Though India’s relationship with the US is of enormous strategic significance, so too is it’s relationship with key powers like Russia.
• In future, India will need a variety of regional and big-power partners to pursue its interests in a complex world. Russia will, without doubt, be among the most important of them.

Connecting the dots:

• Critically examine the changing trend of India Russia relations in recent times.
• Do you think Russia is a natural friend of India? Substantiate
• Do you think USA is hindering development of India Russia relations to its fullest potential? Substantiate

NATIONAL

TOPC:

General Studies 2:

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Issues relating to development and management of Services relating to Education, Human Resources; Governance Issues
• Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests   

General Studies 3:

• Indigenization of technology and developing new technology; National Security and challenges

Is ‘Make in India’ is a mere slogan?

In the Back drop of recent Prime ministerial visit to foreign countries, is being accompanied by big-ticket defence purchases, such as

• India-Russia: Deals worth over $10 billion are expected to be finalised, bringing Russia back on the list of top defence suppliers after a break of several years.
• India- US: Cabinet Committee on Security cleared deals worth over $3 billion, approving the long-pending purchase of Apache and Chinook helicopters.
• India-France: 36 Rafale fighters from Dassault through a government-to-government deal, overriding years of ongoing negotiations with the same company to buy 126 fighters under the MMRCA (Medium Multi-Role Combat Aircraft) open tender.

Above mentioned big-ticket defence purchases would help improve International Relations and immediate military preparedness but may fall prey to legacy of past several decades in defence procurements — import-dependent, risk-averse and corruption-riddled.

What is ‘Make in India’ initiative all about?

• A major national program, designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property, and build best-in-class manufacturing infrastructure.
• From Automobiles to Agro-products, Hardware to Software, Satellites to Submarines, Televisions to Telecom, Pharma to Biotech, Paper to Power Plants, Roads to Bridges, Houses to Smart Cities, Friendship to Partnership, Profit to Progress. Whatever you want to make: Make in India.

Why there is a need for Make in India initiative especially in defence sector?

• India has the third largest armed forces in the world.
• India is one of the largest importers of conventional defence equipment and spends about 31.5% of its total Defence budget on capital acquisitions.
• Around 65% of India’s defence requirements are met through imports.
• The defence budget is 13 % of the Central government’s total expenditure, and almost 2 per cent of India’s GDP.

What are the reasons to invest in India to bring self-reliance in defence sector?

• India’s current requirements on defence are catered largely by imports. The opening of the strategic defence sector for private sector participation will help foreign original equipment manufacturers to enter into strategic partnerships with Indian companies and leverage the domestic markets and also aim at global business. Besides helping build domestic capabilities, this will bolster exports in the long term.
• Opportunities to avail defence offset obligations to the tune of approximately INR 250 Billion during the next 7-8 years.
• The offset policy (which stipulates the mandatory offset requirement of a minimum 30% for procurement of defence equipment in excess of INR 3 Billion) introduced in the capital purchase agreements with foreign defence players would ensure that an eco-system of suppliers is built domestically.
• The government policy of promoting self-reliance, indigenisation, technology up gradation and achieving economies of scale and developing capabilities for exports in the defence sector.
• The country’s extensive modernisation plans, an increased focus on homeland security and India’s growing attractiveness as a defence sourcing hub.

Need of the hour: A missing military-industrial complex.

• India is probably the only large democracy without a robust military-industrial complex. According to data released earlier this year by the Stockholm International Peace Research Institute (SIPRI), India accounted for 15 per cent of the volume of global arms imports in the previous five years. In terms of financial value India was only second to Saudi Arabia in 2014 on military purchases from the global market.
• India’s imports are three times that of China. China took dramatic turn from importing defence equipment to major exporter of arms, increasing exports by 143 per cent over the period. Now, China is the world’s third-largest military exporter today. China has rapidly built itself a very robust military-industrial complex.
• The big-ticket purchases announced in world capitals are taking away a major pie from the capital budget of the Ministry of Defence (MoD). Already, most of the capital budget is going towards committed liabilities — payment for contracts concluded in the past. In 2014-15, 93 per cent of the capital budget went into committed liabilities, leaving just 7 per cent for new purchases.

Pending Reforms:

• In the wake of Kargil conflict of 1999, among the major reforms was the effort to end the stranglehold of government-run public sector units (PSUs) and the Ordnance Factory Board over military supplies, with the Indian private sector allowed entry into defence contracts. Over the years, the FDI limit has also been raised to 49 per cent. However, none of it seems to have created enough momentum to create a large domestic defence manufacturing base and any significant technology transfer.
• For instance, Larsen and Toubro has almost 1,000 skilled engineering staff who built hulls for indigenous nuclear submarines; there are such capabilities on various fronts with various Tata Group firms such as Tata Power SED (Strategic Engineering Division), Kalyani Group, Mahindra Group, etc. But there is no clarity about how to nurture the nascent capabilities in the private sector.

Way Ahead:

• Ultimately, the creation of a robust military-industrial complex would require an overhaul of higher education to create well-trained manpower.
• A 10-member committee set up by the MoD in May 2015, to evolve a policy framework for facilitating Make in India in the defence sector has come up with several recommendations. Among its most significant recommendations is that Make in India should not end up being “assemble in India with no IPR (intellectual property rights) and design control”.
• A committee under Dr. A.P.J. Abdul Kalam, then scientific adviser to the defence minister, had recommended that India should look at increasing its defence acquisition from within India from 30 per cent to 70 per cent by 2005. The year was 1995. However, today indigenous acquisition is still hovering around 35 per cent. The MoD expert committee has now suggested that 2027 should be the target year to achieve 70 per cent self-reliance.

Discussions about guns versus butter (defence versus civilian goods) can be endless, but it would be unrealistic to wish away the merits of an indigenous military-industrial complex, especially given its repeatedly proven ability to better lives beyond the military realm, its criticality for securing the nation state, and ability to bring down corruption in purchases.

Connecting the dots:

• Are Big-ticket defence purchases with other countries making ‘Make in India’ a distant dream in bringing self-reliance in Defence sector? Comment.
• Is missing military-industrial complex boon or bane? Suggest reforms to make India to achieve self-reliance and become an exporter of defence equipment by next decade?

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