CURRENT SUPPORT BRIEF INDIAN DEFENSE REQUIREMENTS STIMULATE THE ELECTRONICS INDUSTRY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001800160004-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 12, 2016
• Document Release Date: July 22, 2002
• Sequence Number: 4
• Publication Date: December 13, 1963
• Content Type: REPORT

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Current Support Brief
INDIAN DEFENSE REQUIREMENTS
STIMULATE THE ELECTRONICS INDUSTRY
CIA/RR CB 63-98
13 December 1963
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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Excluded from automatic
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Sees. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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INDIAN DEFENSE REQUIREMENTS
STIMULATE THE ELECTRONICS INDUSTRY
In August of this year the Indian government established an Elec-
tronics Committee to review the condition of the domestic electronics
industry and to make recommendations with a view to achieving "self-
sufficiency in this field. I/ The Committee appears to be primarily
interested in measures affecting military programs, but civil require-
ments also are receiving some attention. The current interest in mili-
tary programs stems directly from the confrontation with Communist
China last year. During the border clash, severe weaknesses were
evident in all areas of communications and in air defense. Z/
To remedy these weaknesses without increasing Indian dependence
on foreign sources or creating large additional drains on foreign ex-
change, India apparently is embarking on a long-range program to foster
the development of its rather small domestic electronics industry. Be-
cause of this limited base -- three or four government-owned manufactur-
ing plants and about a dozen small assembly plants -- significant results
over the next few years probably will be confined to the production of
military communications equipment. It is likely that the more complicated
air defense systems will be imported. However, some domestic assembly
of military radar, based partly on foreign technical direction and imported
components, may be achieved. In view of the relatively low capital-output
ratio of electronics production equipment and the Indian intention to en-
courage foreign investment in the electronics industry, foreign exchange
expenditures for capital plant need not be excessive. Officials of US
firms consulted by the Chairman of the Electronics Committee have been
favorably impressed by the Indian approach to this program.
1. Past Performance
In the past, India has depended on foreign sources for its major
military and industrial electronics needs. Imports of electronics gear
probably will remain a significant part of future expansion programs.
At present, India is attempting to meet some of its military electronics
requirements from abroad -- for example, surface-to-air missiles
with their related electronics equipment from the USSR and microwave
communications systems from Japan. Severe shortages of foreign
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exchange, however, put sharp limits on such imports. As a conse-
quence, the Indians have tried to build up domestic production. Lack-
ing the production equipment and technology, India has encouraged
foreign investment and technical assistance with some success. In the
past few years, components plants with a capacity of several million
transistors in addition to standard components have been established
with the help of US companies. In addition, a good deal of electronics
equipment -- mostly for communications -- is manufactured under
foreign license and in collaboration with foreign firms. Even so,
production of electronics equipment was far below requirements, and
priorities were not high.
At present, consumer electronics production, primarily radio-
broadcast receivers, is quite small in relation to the large population
of India, and very little in this area is imported. A lack of demand,
resulting from India's low per capita income, probably is the cause of
this situation. Some 350, 000 to 400, 000 receivers are manufactured
annually -- less than the number manufactured in Poland, a country
with only 7 percent of the population of India. And, in spite of new
plants, the Indian industry meets less than half of its components needs
for consumer electronics goods. Other areas of production, such as
that for the military and for communications networks, are similarly
small.
2. Future Plans for the Industry
The course of the Indian electronics industry in the next few years
will be determined largely by the requirements and priorities of the
military. The Indian Army, Air Force, and Navy make up one of the
largest military establishments in the world -- ranking fourth in total
manpower. The quality of its electronics gear, however, ranks much
lower. The Army is largely equipped with obsolete pre-World War II
communications gear, and the Air Force, although not too poorly
equipped electronically for offensive action, has very little defensive
capability. If the Indian government makes a serious attempt to equip
this force with more efficient electronic equipment produced in India,
the impact on the domestic industry will be prodigious.
The goals of the Electronics Committee, which are fairly broad,
were preceded by a thorough survey of the possibilities of foreign
assistance 25X1
T e Committee
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intends to set up three or four new government-owned electronics plants
for the manufacture of defense equipment. The
Committee also intends to concentrate the efforts-of the government-
owned plant in Bangalore, Bharat Electronics, Limited, on the manufac-
ture of communications equipment, tubes, and transistors. The Bharat
plant is the largest in the comparatively small Indian industry. Last
year it produced about $2. 5 million worth of equipment and components
for the military plus an unknown quantity for civil uses. In the past, it
has produced mostly communications gear; hence the intended concentra-
tion is quite logical. Moreover, the concentration of its largest plant on
production of components also is reasonable, as the Indian industry has
been manufacturing components only since late 1961 and is still far from
meeting demands.
The Committee also will encourage the privately owned sector of the
industry to implement more stringent control of the quality of components
in order that they may correspond more closely with government standards.
Finally, the Committee plans to encourage the private sector to manufac-
ture both civil and military equipment in collaboration with well-known for-
eign firms. Collaboration of this type minimizes expenditures of foreign
exchange. As noted above, foreign companies have always played a large
part in India's electronics industry through both investment and technical
assistance. Therefore, no particular problems should be encountered in
this respect. All in all, the Indian program appears to be competently
administered and to have high priority.
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