DRDO CONVENES INTERNATIONAL CONFERENCE ON MANAGING

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 003136

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SUBJECT: DRDO CONVENES INTERNATIONAL CONFERENCE ON MANAGING
DEFENSE R&D

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Classified By: Science Counselor Satish Kulkarni for Reasons 1.4
(B and D)


1. SUMMARY: (C) The Defense Research and Development
Organization (DRDO) sponsored their first ever international
conference on managing defense research and development
December 3-5, in honor of their 50th anniversary. The
conference was organized jointly by DRDO and the Federation
of Indian Chambers of Commerce and Industry (FICCI),and
attended by GOI officials, industry officers, Indian
university representatives, and delegates from at least 13
countries. Key themes that emerged from the conference were
India's need to encourage self-sufficiency in defense R&D and
production by integrating better with civilian organizations,
change focus to face new asymmetric threats, and concentrate
on solving issues of personnel inexperience and turnover. END
SUMMARY.

SIGNIFICANT POTENTIAL FOR DRDO/INDUSTRY COLLABORATION, BUT
MOVING SLOWLY


2. (C) Minister of State for Defense Production Mr. Rao
Inderjit Singh, Secretary General of FICCI Dr. Amit Mitra,
Secretary of Defense Production Mr. Pradeep Kumar, and others
at the conference called for increased Indian self-reliance,
noting that between 60 and 75 percent of India's defense
acquisitions currently come from abroad. Mr. Atul Kirloskar,
head of Confederation of Indian Industries Defense Committee,
and several other industrial, academic and defense
participants noted that research in the private sector was
far outpacing DRDO, and that DRDO could not effectively keep
up with the demand for defense capabilities. Mr. Singh said
he was frustrated by technology transfer and import
restrictions on the best defense technologies, and that India
needed to find a way around them. All parties acknowledged
that moving forward was only possible with a strong defense
and industry partnership but seemed to disagree on how such a
partnership should be implemented.


3. (C) The defense sector opened to commercial participants
in 2001 and according to Mr. Kumar has been very slow to
evolve. From several conference presentations and sidebar
conversations, it was clear that industry sees greater
opportunity for investment in India's defense market but is
hesitant over concerns about DRDO's way of doing business.
Mr. Kirloskar emphasized the need for a formal framework for
interactions to prevent some of the DRDO practices that
discourage industry participation - for example, taking a
developed project away from a commercial company and giving
it to a defense company for production, thereby cutting the
commercial partner out of significant potential profit.
Chairman and Managing Director of Bharat Electronics Ltd Mr.

V. V. R. Sastry also described a Ministry of Defense
evaluation process harsher for Indian products than for
imported ones. Industry suggestions for they way forward
focused on joint ventures and majority government funding of
research that would result in the Ministry of Defense (MOD)
owning the IPR while the commercial entity develops and
produces the technology. Despite declared industry
misgivings, a 383 page guide on major DRDO industry partners
and their defense contributions released at the conference by
DRDO and FICCI clearly shows Indian commercial entities have
played a role in defense R&D over the past several years.


4. (C) DRDO, on the other hand, is concerned about whether
industry is willing and able to meet defense needs,
especially when they are not commercially profitable. Mr. M.
Natarajan, Science Adviser to the Defense Minister,
highlighted his concerns about continuity of supply and

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supply chains, the ability of industry to provide product
support in spite of fluctuating order levels, and whether
industry would protect defense intellectual property. Avnish
Chander, director of the DRDO Advanced Systems Laboratory in
Hyderabad, pointed to cultural differences as a major issue
in DRDO/industry relations - specifically that the industry
didn't meet DRDO's requirements for quality, and that DRDO
didn't meet industry requirements to hold down costs. In a
perfect world, Mr. Singh and others said they would like to
see competition between private companies to develop and
market defense technology, giving the MOD multiple technology
and vendor choices. Even one of the industrial speakers, Mr.
Sastry, lamented the lack of multiple vendors and competition
for critical subsystems. Several DRDO representatives
expressed a desire to leave most of the defense R&D to the
commercial and academic realms and refocus DRDO narrowly on
future technologies of the greatest importance to defense.


5. (C) At the concluding session, Dr. Suman Bery, Director
General of the National Council of Applied Economic Research
(NCAER),presented Mr. Singh with the results of a study on
the economic impact of DRDO expenditures over the last 15
years. The study, which was not provided to conference
participants and may eventually be released at the discretion
of DRDO, found that DRDO provided positive benefits to the
Indian economy and influenced academics, infrastructure and
strategic security. (NOTE: SCIOFF observed several
discussions - official and sidebar - about the relevance of
DRDO and its ability to deliver. The public unveiling of
this study, along with the DRDO-industry partner guide and
even the conference itself may be an effort by DRDO to
re-assert or perhaps redefine its relevance in light of the
changing R&D environment in India. END NOTE.)

FUTURE RESEARCH EMPASIS ON ASYMETRIC THREATS


6. (C) While not discounting the importance of conventional
military superiority, multiple speakers, including Mr.
Natarajan, Mr. Singh, and Chief of Integrated Defense Staff
Air Marshal S.C. Mukul, expressed their belief that future
research would be driven by the threats of international
terrorism, organized crime, and the proliferation of weapons
of mass destruction. Mr. Natarajan pointed out that these
were problems not only for the MOD, but also for homeland
security and the scientific community. To prevent conflicts
and manage crises Dr. Kota Harinarayana, a Raja Ramanna
Fellow at the National Aerospace Laboratories, stressed the
need for more effective integration of political, military
and intelligence sectors while Indian military participants
spoke about the importance of jointness and interoperability.
To encourage a strategic defensive approach, the GOI just
approved the acquisition of land in the national capital
region for a Strategic Defense University, according to Mr.
Singh.


7. (C) To meet these asymmetric threats, speakers provided
their views on where India's future R&D should be focused.

-- According to Mr. Singh, future research would focus on
propulsion and sensors. He highlighted in both the opening
and closing sessions that India was not looking to expand its
territory and thus should focus on defensive technologies.
He also noted that India should reexamine its policy of not
exporting military equipment or materials to areas with
conflicts in order to allow the defense sector more leeway
for profitable export activities.

-- Dr. V. K. Saraswat, DRDO Chief Controller for R&D, said
the thrust areas for Indian R&D would be surveillance,

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precision attack, anti-submarine, information assurance,
kinetic energy weapons, nanotechnology, and virtual systems.
Dr. Saraswat also indicated that India's technology strategy
needed to focus on human systems, combat systems, and sensors
and information.

-- Air Marshall Mukul indicated that an overarching strategy
to translate technology into a decisive war capability was
vital. His areas for future focus were information
superiority, electronic warfare, area missile defense, combat
identification technology, urban operations, combating
terrorism, nuclear, chemical and biological, and logistics.


8. (C) Some of the industry presenters spoke briefly about
going "green" for future defense technology R&D during their
presentations. Dr. Arun Jaura, Group Chief Technology
Officer for Mahindra, focused specifically on hybrid
propulsion technology. However DRDO representatives were
dismissive and did not seem to see MOD use of hybrid,
renewable, or other alternative technologies as a likely in
the near future given their unproven reliability and high
development and manufacture costs.

HUMAN CAPITAL SHORTAGES HAMPER EFFORTS


9. (C) One of the eight conference sessions was devoted
specifically to examining human resources issues for defense
R&D. Several speakers mentioned the lack of skilled
personnel and competition between various government and
private sectors for those personnel as a significant issue.
Mr. Singh and the HR panel members stressed the need to
address the attrition issue, noting that DRDO has difficultly
attracting and retaining scientists since even eminently
qualified scientists can find more lucrative work as
investment bankers. Mr. V.R.S. Natarajan, Chairman and
managing Director of BEML Ltd, claimed that many of DRDO's
engineers were leaving, and that DRDO was looking for a
manageable attrition rate of 5-10 percent. Mr. S.V.
Ranganath, Member (Finance) of the Space Commission, Atomic
Energy Commission and Earth Commission, highlighted that most
of the scientists at DRDO are from the 1960's and 70's and
have "hands-on" experience, while those who will succeed them
come from the 80's generation of computers and internet. He
stressed the need to ensure knowledge was passed to the new
generation through mentoring. To retain new workers, Mr.
Ranganath hailed the importance of internal recognition,
since most of the work could not be published or lauded by
the international scientific community. (NOTE: SCIOFF
estimated that about 75 percent of the DRDO conference
attendees were close to the mandatory retirement age, and in
conversations with several participants learned that there
would be a significant wave of retirements in the next three
to five years. This generation shift is likely to create
significant logistical, personnel and knowledge management
issues for DRDO, but at the same time create an opportunity
for changes that seem to be unobtainable by, or at least
unpalatable to, current leadership. The next couple years
should prove an opportune time to influence India's defense
R&D future. END NOTE)

INTERNATIONAL PANELISTS PROVIDE DEFENSE/INDUSTRY MODELS FOR
DRDO


11. (C) Panelists from Canada, France, Germany, Israel,
Malaysia, Russia, Singapore, South Africa, South Korea, the
U.K., and the U.S. spoke on management of the relationship
between industry and the defense sector in their home
countries. The conference schedule permitted SCIOFF to see
only a few of the presentations, which were for the most part

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focused on how to deal with cuts in funding and resources,
and how to manage a commercial defense sector that sells both
domestically and internationally. Mr. Singh thanked the
international delegates for providing their perspectives;
however it was unclear how much of the presentations the MOD
and DRDO really absorbed.

COMMENT


12. (C) Much of the event seemed to be an opportunity for
DRDO to highlight its accomplishments over the last 50 years,
even as an undercurrent of insecurity about the
organization's future relevance ran though the conference.
India's MOD is clearly interested in moving towards an
indigenous defense capability, for financial and national
security reasons, but is going to have a difficult time
achieving that in the next five to ten years. Changes in the
basic defense R&D and production systems and significant
focus on human resources will be required for India to begin
expanding MOD-industry relationships and cutting down
reliance on imports. END COMMENT.
MULFORD