What new initiatives is GIDS involved in?

SHAH: First of all, for developing countries and third world countries it is important to save foreign exchange by having self-sufficiency in their own industry to support their armed forces. In that term, I think we are doing a great deal by saving a huge amount of foreign exchange. We’re developing our own system and supporting our defence forces and law enforcement agencies through our own solutions. Secondly, whenever the defence industry is established, it gives job opportunities in the work force. In Pakistan, we have 200,000 people working in the defence industry and that does not include the vendor industry, which provides auxiliary support to our main industry. Beside this, logistics, raw materials, and the downstream industry, makes the economy more vibrant.

How much does the defence industry contribute to the economy of Pakistan?

SHAH: I would start with the global figures. Generally, defence expenditure ranges between 2% to 4% of the GDP of any nation. Of course, there are a few exceptions, which go beyond those figures. In the case of Pakistan, the figure is slightly more than 3% of the GDP. In terms of the expenditure, the major expenditure is not only on operations and maintenance, but also on the development budget. Our endeavors are to save the development budget by providing cheaper solutions, indigenous solutions, and saving foreign reserves. I would say that we are saving about 50% of the defence budget for development and purchase of parts and defence equipment.

How would you describe the level of defence research and development taking place in Pakistan?

SHAH: We have to remain a viable as a defence industry and to remain viable, research and development is the most important. In Pakistan, we concentrate more on the applied research, rather than on the primary research. In terms of applied research, what we do is not only to upgrade the existing products and systems, but also to develop new products and systems to meet the users’ requirements. In that context, we are contributing considerably in the form of research and development. We also involve our universities and institutions to enable the linkage between the industry and the academia for research and development. Apart from that, we carry currently basic research in very critical areas, where technological solutions are not prevalent.

What innovative solutions have you developed based on experience on-the-ground?

SHAH: We are living in a very hostile environment where we are facing a real threat all the time. Therefore, we continuously look for new solutions; sometimes we face even new problems because we are facing the terrorist brunt in a very big way. As you know, such people have total freedom of action and no consideration for humanity. We need to continuously keep a watch on where they are going and how are they operating. Thus we are using more software and IT-based solutions like battlefield awareness and situation awareness. Similarly, we are working on how to automate our systems where the response time reduces considerably. In that regards, we have been able to achieve a lot. One of the areas where we have made a lot of breakthroughs is the development of our integrated battlefield management system; we have also automated some of our detection and protection mechanisms. Apart from that, we have been able to improve the performance of our existing product systems; for example, their accuracy and lethality, and in some cases even reduced their costs, by continuously applying new technologies.

Currently, what are your biggest export markets?

SHAH: Being a middle level technology industry, we obviously do not target the industrialized world; North America, Europe, Russia, or China. What we are looking at is countries which have defence requirements but do not have huge budgets. In that context, our focus of operation includes South and South-East Asia. We are also looking to collaborate more with the Middle East. Our new markets are Central Asian Republics. We are already operating in Africa and lately we have been taking initiatives in South America.

What international partnerships are you most keen to pursue?

SHAH: I would say that any market which has a potential because this is an industry driven by business motives. Obviously, we are looking at wherever the business is. However, our focus is always on areas where there is a void. I mentioned about the Central Asian republics. Those are the republics which came up about 20 years back and these are still in the process of developing their armed forces on modern lines and getting out of the Soviet based systems and equipment.

How much growth potential do you see in Asia-Pacific markets?

SHAH: I do see a considerable growth potential in the Asia-Pacific region. The world’s defence expenditure has reached $1.6 trillion, and almost 40% to 50% of that has been spent in North America.  When it comes to export and import, Asia is probably the largest importer in general of defence products. With Asia, apart from the Middle East, in South and South-East Asia the countries are more into imports of defence products and the potential is constantly increasing. However, I may say that these countries, including Malaysia, are endeavoring to also develop their own industry. Therefore, the potential is more into joint ventures and into developing partnerships.

How has increased competition from Western suppliers impacted your business in your legacy markets in the Middle East?

SHAH: We always look for a niche of products and systems. Sometimes the Western industry has very good solutions for high tech and very strategic defence systems. But at the levels that we operate, we do manage to find a niche even there. In this particular market, which is our legacy market, we will continue to consider this as our major marketing future.

How much does the Middle East account for out of the total Asian defence industry?

SHAH: I do not have precise figures, but I believe that it is quite substantial, around 40% to 50% of the overall Asian defence industry.

What are the new areas on the rise in the defence industry?

SHAH: Even countries which had no defence industry are now keen to have some sort of rudimentary and elementary industry, where they could be self-sufficient in some of the products. This change has taken place all over the globe. The defence manufacturers like us have to look for partnerships, rather than pure exports.  They have to understand users’ requirements in a better way. Not only in terms of the general type of requirements, but also in terms of their economic and industrial potential, no matter if that already exist or if they are aspiring to achieve it. In that regard, understanding each and every country, their requirements and their aspirations, becomes very important. This is one of the areas on which we dedicate a lot of research. We are very keen to develop joint ventures, partnerships, transfer of technology, or at least partial transfer of technology, which could be absorbed by such countries.