Rising Corporate Military Complex in India: A Critical Appraisal

— by Rahul Varman, rahulv[at]iitk.ac.in [1]

I. Introduction

India’s rulers treat the country’s military might as synonymous with its health and international stature. Acquisition of the latest weaponry has become such a fixation for the military establishment that a commentator recently called the new defence minister the ‘minister for defence procurement.’^[2]

A few themes keep recurring in press coverage of military procurement: that the Indian military is in dire need of modernisation (and modernisation means getting the latest weapons available internationally); that the country’s production system of military hardware (consisting mostly of public sector units – PSUs) has failed to deliver on its promises and has become a massive drain of resources; hence the need to look to imports and/or foreign direct investment (FDI) and the private sector for military modernisation. Indeed a corporate military complex in India appears to be in the offing.

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Making Room in India – for Whom?

Major changes are under way in India’s defence sector. Prime Minister Modi claims that the defence sector is at the heart of his “Make in India” programme. He has announced his government’s intention to decrease the share of imports in arms purchases from 60 per cent at present to 30 per cent over the next five years. He claims the consequent increase in domestic production could create an additional 100,000 to 120,000 highly skilled jobs in India.

Key to Modi’s plan is increasing foreign direct investment (FDI) and the involvement of the Indian private sector:

We will build an industry that will have room for everyone – public sector, private sector and foreign firms. From sellers, foreign firms must turn into strategic partners. We need their technology, skills, systems integration and manufacturing strength.[1]

In his 2015-16 Budget speech, Arun Jaitley claims: “Our Government has already permitted FDI in defence so that the Indian-controlled entities also become manufacturers of defence equipments, not only for us, but for export.”

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Bank Board Bureau: Another Step toward Privatisation and Foreign Takeover

The finance minister said in his recent Budget speech:

In order to improve the Governance of Public Sector banks, the Government intends to set up an autonomous Bank Board Bureau. The Bureau will search and select heads of Public Sector banks and help them in developing differentiated strategies and capital raising plans through innovative financial methods and instruments. This would be an interim step towards establishing a holding and investment Company for Banks.

What exactly is going on?

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Public sector banks: Reform by Death

The Government is determined to put several public sector banks to death. This is not an accusation leveled by a trade union leaflet or a political opponent of the Government. Rather, this plan has been spelled out and recommended, in precisely these words, by the current Chief Economic Adviser (CEA) to the Government, shortly before he assumed that post.

The Government is busy implementing that plan, as we can see in the present Budget. The objective is the private take-over of India’s banking sector. Discussion on the staggering consequences of this plan is virtually absent from corporate media outlets (some of which, indeed, are themselves deeply involved in the private financial sector).

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