Events

The army has been involved in counterinsurgency (CI) operations for almost six decades both within the country and in Sri Lanka. The causes of these uprisings are well known, as is the evolution of CI movements. However, as a key constituent of the government’s CI strategy, a study of the army’s ability to adapt to change deserves greater focus.

Change has been evident, however slow, in the pattern of India’s socioeconomic evolution. The country has also witnessed political empowerment, giving both voice and visibility to demands, thereby influencing the manner in which the country is governed. There is greater transparency in every facet of public life. The media on its part has further ensured greater accountability from government functionaries. The nature of threats, both internal and external have evolved, though with the Pakistan factor remaining a challenge and a key determinant for resolving existing issues in Jammu and Kashmir.

While each of these factors can be assessed in isolation, yet their impact on the conduct of CI operations by the army has been perceptible. These changes have taken place in the backdrop of over six decades of the army’s involvement in CI operations. Needless to say, some of the fac-tors enumerated, have influenced the manner in which the army deals with the challenge of CI op-erations. It has led to adaptation to change, either as a result of extraneous influences and at times because of internal evolutionary mechanisms.

Change takes place at a number of levels and depending upon its nature and pace, it can be both revolutionary and evolutionary. However, a test case of successful change is the ability to transform the manner in which assigned objectives are achieved. In a more conventional sense, it could be achieved by adapting designated goals, strategy or organisational structure. However, giv-en the nature of operations in a CI environment, operational level adaptation can also be instrumen-tal in bringing about major change.

With this as the backdrop, a roundtable discussion is being organised at IDSA on Feb 27, 2014, from 1430 to 1700 hours on how has the army adapted to change in CI operations. The proposed format of the discussion entails a brief introduction to the subject, which will be followed by a short presentation by nominated lead speakers amongst the invitees, on specific issues per-taining to the subject. After each presentation, the floor will be opened to the audience to invite comments and questions. The format has been adopted to ensure focused and deliberate discus-sion on specific areas. A brief summary of subjects that will be taken up for discussion and lead speakers for each are as follows:

• The Indian Army has been employed in CI operations in the Northeast, Sri Lanka, Punjab and Jammu and Kashmir. Did these operations witness a clear goal for the army? Can such a goal be assigned given the protracted nature of operations? Were there cases of shifting of goals, due to strategic over reach or changing conditions? How did this impact the conduct of successful oper-ations? Maj Gen Umong Sethi (Retd)
• Over a period of time the army has evolved its distinct method of fighting in CI operations. Has there been any major change in the strategy adopted by the army at the doctrinal level? If yes, what have been the drivers for this shift? How successful has been this adaptation to change? With specific reference to J&K, how has the army adapted to the external threat from Pakistan in addition to the internal threats of more conventional CI operations in the state. How does this ad-justment take place vis-a-vis other CI areas, which have a negligible external threat. Maj Gen Dipankar Banerjee (Retd)
• The army units have been involved in making local organisational changes at the unit level to adapt to CI operations. This includes creating an additional company from within the resources of Support and HQ Company. In addition to the experiment of ‘I’ Battalions in the Northeast, the Rashtriya Rifles concept has been the most prominent change in CI operations. Did the army adapt adequately in terms of organisational changes, given its employment in CI operations since the fifties? Has organisational change at the headquarter level also been accompanied by a man-power policy, which ensures posting specialists to appointments that deal with issues like infor-mation warfare, psychological warfare and cyber warfare? Did training for CI operations and specialist staff appointments create adequate capacities and in the right time frame? Maj Gen Umong Sethi (Retd)
• There have been distinct changes in the army’s operational conduct of CI operations over the years. What were the major changes witnessed in this regard? What was the reason for these changes to take place? How much of the change was forced by external factors? Did some in-ternal thought process lead to major changes? Have the changes merely been incremental, with limited ability to think out of the box? Maj Gen Dhruv Katoch (Retd)
• Does the army have a distinct strategic culture in relation to CI operations? How has the strategic culture of the army impacted its ability to adapt to change, as seen in the context of CI opera-tions? Has it been a limiting or supporting factor in the successful conduct of operations? Brig Rahul Bhonsle (Retd)
• Do civil-military relations have an impact on CI operations? If yes, what has been its impact on the process of change, its pace and quality? Dr Manoj Joshi
• India has witnessed coalition governments in the recent past. There has also been a trend of re-gional parties having serious differences on the CI policy. What has been the impact of a domes-tic politics on the conduct of CI operations and adapting to the changing environment? Maj Gen Dhruv Katoch(Retd)
• How well has the army employed technology to adapt to changing threats and emerging chal-lenges? Has the adoption of technology been ahead or behind the curve? Has the army played catchup with terrorists or incorporated technology proactively. Brig Rahul Bhonsle (Retd)

Chair: Professor Baladas Ghoshal
External Discussants: Dr Vijay Sakhuja and Professor Ganganath Jha
Internal Discussants: Cdr S S Parmar and Ms M S Pratibha

Chairperson: Prof Charan D Wadhva
External Discussants: Prof S D Muni and Prof Ganganath Jha
Internal Discussants: Cdr S S Parmar and Dr Udai Bhanu Singh

Prof. Wadhwa initiated the event by giving a briefing on India-Thailand bilateral relations which is grounded on historical inheritances. Thailand, being one of the closest Southeast Asian neighbours of India, bears many semblances with India in terms of culture, traditions, geography and economy.

Followed by this brief introduction, Ms. Chingchit began her presentation. During the Cold War Thailand and other non-communist countries in Southeast Asia considered India as being a close ally of Soviet Union’s and thus maintained a limited engagement. The shift in Thailand’s foreign policy orientation in 1988 allowed India to become Thailand’s natural partner by virtue of its geographic location, economic potential and geopolitical pre-eminence in South Asia. Finally, in January 2012, Thailand and India signed a Memorandum of Understanding on Defence Cooperation after 67 years of diplomatic relations and two decades of collaboration to expand the defence and military ties between the two countries. Prior to 2012, Indo-Thai defence relation had been largely unaddressed and underdeveloped. Until now, despite having military engagements in the areas of military exercise, joint patrol and defence dialogue under bilateral and multilateral frameworks, the existing defence cooperation between India and Thailand has never been noteworthy. This does not correspond with the increasing significance of India-Thailand partnership and the changing power and security dynamics in Asia. As a part of defence diplomacy, both sides need to strengthen their military ties to complement their growing engagement in other spheres. However, it remains to be seen as to what extent and in which domain Thailand and India can manage to push their defence relation forward.

Prof S D Muni mentioned that since no major work has been done on Indo-Thai defence cooperation in India, Ms. Chingchit’s paper has certain relevance. The data used are mostly primary and hence, the paper is useful. However, he recommended that Thai media reports could also be used to get the Thai perspectives on the subject. Prof. Muni argued that the paper lacks strategic background on Indo-Thai relation- how it has been evolving and unfolding. Post Cold War changes could have been brought in the beginning of the paper. He further argued that Thailand has been successfully balancing China and US in the region, as mentioned by Ms. Chingchit in her paper; however, most of the Southeast Asian countries have been following the same trend in the region in order to avoid any major conflict. How India is perceived in Thailand was not mentioned in the paper, Prof. Muni pointed out. Moreover, the minor defence cooperation between India and Thailand that was in existence before 2012 could have been incorporated in the paper, opined Prof. Muni. Factors like growing importance of Bay of Bengal, common concerns like terrorism, money laundering etc. need to be focused too.

Followed by the opinion by Prof. Muni, Prof. Jha said that Thailand’s geographic location is important and the capability of the Thais in strategic thinking is at par in excellence in comparison to other Southeast Asian countries. He mentioned that the training exercises of Indian National Army were conducted in Phuket. However, during the Cold War, some disturbances appeared in the Indo-Thai relations. After this brief phase of bewilderment, both India and Thailand came closer to each other followed by the Look East Policy of India and formation of BIMSTEC signalled a positive step in India’s relations with Thailand. Between 1998 and 2002, a lot of other attempts were taken to enhance Indo-Thai relations. In the recent time, the Daewoo project evokes fascination. At the end of his discussion, Prof. Jha said that for India, Thailand is a major stakeholder in its efforts of developing good relations with the Asia Pacific countries.

Cdr Parmar mentioned that not much material is available on Indo-Thai defence cooperation in the newspapers and this explains the limitations of the relationship itself. He stressed on the low activities and low initiatives in the relationship between India and Thailand. He focused on the limitations in the bilateral defence cooperation between India and Thailand which should be emphasized in the paper also. How Thailand can use the multilateral-regional platforms like IORA in enhancing its relations with India, what are Thailand’s expectations from India and how US and China factors influence the bilateral equations between India and Thailand were some of the major thrust areas identified by Cdr. Parmar.

Dr. Singh said that most of facts of defence relationship between India and Thailand have been covered in the paper. However, greater attention to the regional security architecture needs to be covered in order to explain the challenges and constraints. Lack of connectivity, infrastructural gaps exist in the North-eastern region of India, opening of Myanmar and other related factors need to be explained in the paper. In addition, Dr. Singh mentioned that the paper has no reference on the regional economic architecture which surely has a deeper impact on the regional security architecture. How the domestic turmoil inside Thailand is likely to influence the defence and security equations of Thailand was also missing in the paper.

During the general discussion, Prof. Gautam Sen suggested that the aspect of India-Myanmar-Thailand triangle should be discussed in the paper. Another participant, Mr. Peter Van Der Hoest asked about the factors which are holding India and Thailand back from augmenting their defence cooperation. Ms. Bhattacharyya, a Post Doctoral Fellow from JNU said that Thailand does not have any external threat perception and hence, she asked, why should India and Thailand opt for defence cooperation. As the discussion was continued, Cdr Parmar asked about India’s position in Thailand’s Look West Policy and the vice versa. Prof. Wadhwa asked about the economic dynamics of Indo-Thai relations focusing on the comparative advantages of comprehensive economic partnership against free trade agreement.

As concluding remarks Ms. Chingchit observed that Thailand wants India to play greater role in the region, to maintain peace and stability in Northeast India as well as develop its infrastructure, open more markets for Thailand and improve connectivity between India and Southeast Asia.

The discussion ended with a positive note on further collaboration and cooperation expected from Thailand in support of India and the vice versa as bilateral relationship is a two way process.

(Report Prepared by Ms. Sampa Kundu, Research Assistant, IDSA)

Chairperson: Shri V. K. Misra
Discussants: Shri A. K. Ghosh and Shri Amit Cowshish

Dr Laxman Kumar Behera’s presentation on “Arms Trade Offset: Global Trend and ‘Best’ Practices” was broadly divided into two parts. While in the first part of his presentation Dr Behera explained about the volumes, trends, and emerging issues of global offsets. In the second part he dealt with important aspects of best international practices in arms trade offset policies. Primarily, Dr Behera surveyed the offset policies of six countries: South Korea, Turkey, Canada, Israel, Malaysia and UAE which not only have had a declared policy on offsets but have also undertaken periodic revisions based on the experience gained over a period of time. He also referred to Indian offset policy to highlight its convergence and divergence with the policies of those six countries.

He said that given the lack of comprehensive official data on arm trade offsets, the statistics provided by the US Commerce Department’s the Bureau of Industry and Security (BIS) remains the only official source for any meaningful analysis. According to Behera, the BIS data is not only defence specific, but also captures value of offsets and its percentage share in US’ total arms export, and offset transaction by type (direct and indirect) and category (co-production, licensed production, technology transfer etc.). It is however restricted to the US companies which are mandated to report to the US government on any defence export which entails an offset requirement exceeding $5.0 million.

Citing the 17th BIS report, Dr Behera said, during 1993-2011, 53 US defence companies signed 830 offset-related defence export contracts with 47 countries. The value of associated offsets was $83.73 billion, representing 68.28 per cent of total arms export value of $122.67 billion. In 2011 alone, nine US companies signed 59 offset-related defence agreements valued $10.76 billion with 27 countries. The offset value of these contracts was $5.48 billion. Importantly, among all the offset categories reported by the US companies, three categories – purchases, subcontracting and technology transfer – stood out as the most preferred offset transactions. Between 1993 and 2011, they together represented 81.1 per cent by credit value. However, the persistent decline in offset percentage post 2003-2005 raises questions about the use of offset.

In the second part of his presentation, Dr Behera elaborated international best practices in arms trade offsets by touching upon key issues: threshold, percentage, and multiplier in the offsets; value addition; principle of additionality and causality; offset obligations on domestic enterprises; channelling offsets; establishing long-term relationship through offsets; offset swapping; banking and offset trading; implementation and monitoring, etc.

He said that except for Canada, India has the highest threshold limit. This means, unlike most other countries which demand offsets in contracts valued as low as $5-15 million, Indian industry cannot benefit from such smaller contracts unless the contract value reaches $55 million. India has also the lowest offset percentage requirement among the listed countries.

Many countries apply the principle of value addition for the purpose of estimating the true value of offset credit which can be claimed by the foreign vendors. The value-addition principle ensures that the foreign vendors get their due offset credit for the local content they are able to achieve in the buying country. In India, he said, value addition is determined by subtracting value of imported components i.e. import content in the product and any fees or royalty paid from the final purchase or export price of the eligible products. It is however to be noted that unlike Canada which applies the value addition principle for both products and services, Indian policy is only restricted to the products.

He said that many countries including India allow investment as one of the means for discharge of supplier’s offset obligations. However, few countries bother to see if such investment, for which the foreign vendors earn offset credits, is having any real impact on the exception. The UAE’s revised offset policy brought out in 2010 has incorporated a hybrid model for calculation of offset credit that virtually puts onus on the foreign suppliers to ensure that a part of the offset inflows brings real benefits to the UAE economy. On offset policy at the national level, the presenter said that some countries including India operate offset policy in the narrow prism of defence procurement only. However, South Korea and Israel are among those countries whose offset policy is applicable at the national level for both defence and civil procurement.

In the conclusion, Dr Behera said that the role of offsets in arms trade is going to stay for the foreseeable period. Given the shrinking military spending in advanced arms manufacturing countries and the simultaneous increase in defence expenditure by big arms importing countries in Asia and other parts of the world, offsets would play an ever increasing role in the international arms trade. Particularly, in a buyers dominating global armament market, countries, which have declared offsets policy, would try to improvise their existing policies to maximise their arms import.

Moreover, he reflected that India being one of the biggest arms importers in the world, and having a declared offset policy since 2005, it is vital that its policy is not only dynamic and but takes into account some of the fundamental practices followed by other countries. Presently, however, the Indian offset policy, despite having gone through several rounds of revisions still remains a conservative one and lacks some of the fundamental principles adopted by others. Given that offset has a cost premium loaded into the main contract, he suggested, it is high time Indian policy makers take a serious look at the policy.

Shri A. K. Ghosh, former Finance Advisor, Defence Services, observed that the conclusion of the paper is not clearly reflecting in both parts of the paper. The author needs to clearly explain why there is a declining trend in the global markets for the offsets? The author also pointed out that India has highest threshold limit as well as the lowest offset percentage requirement. This aspect needs to be relooked, because India is having a non-aggressive offset policy whereas China is very aggressive in its offset policy. So there is framework or no framework, China will follow an aggressive offset policy. In this context, the paper shows a very conservative perspective. Shri Ghose was of the view that the proposal for establishing a long-term offset policy is very crucial. Israel is a case which looks for establishing such a long term relationship. However, building institutional capability is the key for this on which the author can write forcefully.

Shri Amit Cowshish, former Financial Advisor (Acquisition), Ministry of Defence, said that though the paper does speak about international practices in arms trade offsets, but it does not speak about which one is the best practices. It needs to analyze which one is the best practice and why. South Korea’s practice is appreciated but it is not considered as the best practice and many countries are not following this model. Why other countries practices are not considered as the best practice also need explanation. The value of the paper could be enhanced if it expounds in overall where India stands and how effectively it’s offset policy work. The author also spoke about various fundamental lacunas but the author first needs to explain what those fundamentals are. In fact, the fundamentals are basic features of many countries policy. The author should thus describe which fundamental practices are missing from Indian side. With respect to the management of the offsets, the author talked about the loopholes in the implementation and monitoring side which requires greater attention.

Major Points of Discussion and Suggestions:

• Why there is a declining trend in the global markets for the offsets? What are the main reasons for this?
• India’s policy for offset came in 2006, but that does not mean that it did not have such policy before?
• Any policy works in a particular ecosystem. The UAE does not have its eco-system. So what are the ecosystems of various countries under study?
• The author has given data up to the year 2011. SIPRI annual reports can be used to update the data in the paper.
• The author has given some good recommendations for India, but a fair amount of work should be done to justify those recommendations.
• India is very defensive in its offset policy and its offset contracts reflect what it expects.
• It is a good paper on the arms trade offsets and could be a base paper for further research.

Chairperson’s Remarks: Shri V.K. Mishra, former Financial Adviser (Defence Services), highlighting the significance of the paper as well as Indian offset policy and its various challenges, said that it was expected to have some kind of a transformative impact, given the major gaps not only in the technology but in infrastructure, maintenance, and manufacturing capability. So all in all it was envisioned to provide a fillip to the Indian defence industrialization process. So far much has not happened in this regard. Shri Mishra pointed out that there is misconception that it drags on the acquisition process and tends to unwarranted costs. However, it should not be seen that way. In fact, he said, the offset policy makers had hope that any offsets investment in flow would bring some amount of attractive returns on the investments by the OEMs. Then only it could be sustained. So it will also help in achieving long term relationship with those OEMs and India’s offset partners. These were the expectations. However, the experience has shown with the kind of guidelines India has with regard to foreign direct investments some worthwhile investments are there. There are also aspects of joint venture guidelines which require much greater clarity. Therefore, the progress on this front is very much slow in terms of worthwhile JV entities. There is need to move another level where there would have to be priority defined in terms of the each of the request for proposals (RfP’s) that are issued. Thus, there is a whole range of concerns whether it is technology, maintenance preparation in overhaul, infrastructure facility. He concluded the seminar by thanking all the participants for their valuable contributions and making it a success.

Report prepared by Dr Saroj Bishoyi, Researcher, IDSA