A common refrain in the Indian defence sector is that all defence procurement contracts should contain the clause for full Transfer of Technology (ToT).1 India’s Defence Procurement Procedure (DPP) itself mentions “comprehensive” ToT and “complete” ToT as a requirement in numerous places.2 The fact remains that full ToT has remained elusive. As a case in point, while the Russian T-90 tank contract in 2001 was touted as a successful example of full ToT, a few years later reports surfaced that the ToT was incomplete.3 In tune with this Indian experience, Brazil has been facing similar problems with its insistence on full ToT.4
These facts raise several questions. What exactly is full ToT and why is it that it cannot be ensured, even from friendly nations? Is it correct that foreign Original Equipment Manufacturers (OEMs) intentionally and maliciously deny the technology of the most critical parts of their equipment to Indian recipient agencies? Why is it that these requirements cannot be brought under contractual obligations enforceable by law?
With very little information available on the details of troubled ToT contracts, not much can be said on what has gone wrong. However, in the interest of future contracts, it is incumbent on us to dig a little deeper into these issues, beginning with the question of what exactly amounts to “full” ToT, and why is it so difficult to implement.
To start with, we need to accept that ToT contracts, as described in the DPP, basically deliver only the capability to manufacture the said
equipment. Though design and development of the next upgrade is a greatly desired capability, it is not provided for established reasons, nor purchased due to huge cost.5 So, the argument that ToT is not complete because design and development capabilities have not been delivered really does not hold good.