Dr Rakesh Shukla
Auckland, June 22, 2023
Boosting India’s Defence Capability: Light Fighter Aircraft Tejas gets airborne (ANI Photo)
Self-reliance is the pillar on which the defence capability of any nation rests.
India seeks to be a sovereign world economic power targeting to become a US$ 5 trillion economy by 2025 and thus the fourth largest economy and possibility the third largest by 2027.
Therefore, India should consistently allocate substantial financial and human resources towards developing its indigenous military capabilities to keep its interests well protected.
Since independence over 75 years ago, India has been among the largest importer of defence items in the world. Over 80% of the country’s defence requirements until recently were met through imports due to a lack of indigenous manufacturing capabilities and the absence of requisite technology. This over-dependence on imports made India’s defence capabilities highly vulnerable to geopolitical pressures and international sanctions in case of an armed conflict with another nation. It also drained its foreign exchange, which could otherwise be used for the economic development of the country.
The Indian government is promoting Public Private Partnerships in Defence Production R&D (Photo from Observer Research Foundation)
India’s global aspirations
Another important reason for India for developing self-reliance in its defence sector is the border dispute with its neighbours Pakistan and China and the expansionist policy of the latter.
Recent border skirmishes with China illustrated that additional defence supplies will be needed at short notice, which can only be met if the country is self-reliant.
Besides these strategic reasons, there are other multi-facet benefits for the domestic economy growing its defence sector. Defence production investment will expand the indigenous industry, generate large employment, raise the prestige of the country in the world scenario (India is aspiring to be a permanent member of the UN Security Council), counter China’s expansionist ambition and earn critical foreign exchange for the country.
During the tenure of earlier governments in the last seven decades, the importance of becoming self-reliant in the defence sector had often been talked about but success was minimal. To address this serious issue of national importance, the current government took a policy decision about five years ago that India must allocate the highest priority to self-reliance and work hard in a focused manner towards attaining self-sufficiency in the defence sector.
This new national priority was given the name Atmanirbhar Bharat (Self-Reliance India) with an emphasis on reducing imports in all defence sectors, with a major shift towards boosting indigenous capabilities in producing defence items.
An impressive journey
India’s journey towards self-reliance in the defence sector began with the establishment of the Defence Research and Development Organisation (DRDO) in 1958. Its primary objective was to develop indigenous technologies for the country’s defence needs. Over the years, it has made some progress in developing a few technologies for tanks, missiles, and radars but the indigenous component in the items locally produced has been marginal. In order to accelerate self-reliance, the government took many concrete steps in the last few years.
Among them are the following:
Make in India: This programme aims to promote the domestic manufacturing of defence equipment. Make in India encourages foreign armament companies to set up manufacturing facilities in India with the condition that they will achieve mutually agreed indigenous content over a specified time. Simultaneously, domestic companies have been incentivised to manufacture equipment.
The Strategic Partnership Model aims to promote the development of the defence industry. The government has selected strategic private sector partners such as Tatas for radar systems, Kalyani Group for long-range guns, Reliance Group for warships, Mahindra Group for communication systems and Ashok Leyland for heavy transport trucks and provided them with long-term support to develop indigenous capabilities. This model will play a crucial role in developing a robust domestic defence industry in India within a short time.
Amendments to the Defence Acquisition Procedure 2020 (DAP): The procedure to acquire defence equipment has existed since 1962. But to make it much easier and transparent for all stakeholders, the government announced major structural and procedural reforms in 2020. The premise of the new policy is that all modernisation requirements of the Defence Services and the Indian Coast Guard will be indigenously sourced, irrespective of the nature of procurement.
Import of defence equipment sourcing from foreign industry will be an exception and undertaken with specific approval of the Defence Acquisition Council and/or Minister of Defence. DAP 2020 acquires its premise from Atmanirbhar Bharat and Make in India ambitions and aims to make India a US$ 5 trillion economy by 2025. It acknowledges that the fast development of the defence sector is vital not only for self-reliance in the defence sector but also the key to achieving this economic target.
Simplifying the Licence Process: To encourage Foreign Direct Investment (FDI) in the defence sector, the government has simplified the licensing process. There is a single-window clearance available for foreign companies with much longer validity periods.
DefSpace Mission Scheme: The government has engaged several Micro Small and Medium Enterprises (MSMEs) and government-owned Defence Production Units for fostering the technological development and innovation needed.
Defence Industrial Corridors: The government has launched the Srijan portal and Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu. These corridors attract investments in the aerospace and defence sector, greatly facilitating indigenisation and technology transfer. More States will follow in establishing such corridors.
Public-Private Partnerships (PPP): The government has formed the Society of Indian Defence Manufacturers (SIDM), which is a forum for public and private sector companies to closely interact and find areas where joint innovation and production can be undertaken. This will multiply the resources, knowledge and opportunities for the Indian industry at large.
Foreign Ownership raised to 74%: Previously, only 49% of foreign ownership was allowed automatically, but this has now been raised to 74%, making the defence sector investments more attractive for foreign companies. By bringing in such a liberalised investment policy, the government wants foreign equipment manufacturers to shift operations to India.
Innovations for Defence Excellence (IDEX): This initiative was launched in 2018 to foster innovation in technology development in Defence and Aerospace by engaging industry, including MSMEs, Start-ups, R&D institutes, and academia. It provides for grants and funding up to ₹10 crores (about $2 million) and other support to carry out innovations and R&D for further adoption by the Indian defence and aerospace industry. Under the IDEX initiative, 233 projects concerning the defence of the country have been opened for innovation, 310 start-ups have been engaged with 140 contracts already signed.
Tejas landing on INS Vikrant on February 6, 2023 (ANI Photo)
Portal for Srijan and MSMEs: An online portal for Srijan has been launched, which is a one-stop shop that provides access to vendors, especially start-ups and MSMEs to take up items for production that are available for indigenisation. This portal displays imported items which can be developed and manufactured by MSMEs or through joint ventures with foreign or Indian manufacturers. Many contracts have already been signed by the government.
Defence India Start-up Challenge: There has been a good response to this challenge with over 700 start-ups filing expressions of interest. Out of these, 55 applications have been selected for grants in 15 technological areas.
Positive Indigenisation Lists: The government notified 411 defence items initially through its Positive Indigenisation Lists and later an additional 3738 items. There is an embargo on imports of these items beyond the timelines indicated on the Lists. More embargo items will be announced in the future. All items included in the Lists will be procured from indigenous sources, also stimulating Research & Development and manufacturing capabilities.
Budget for private sector-led R&D: To encourage the private sector, in 2022-2023, out of 68% of the defence capital procurement budget for the domestic industry, 25% has been allocated for the private sector. In addition, 25% of the defence R&D budget has been earmarked for private industry and start-ups.
Collaborative Systems: Public sector defence companies have been asked to strengthen their ties with academic institutions and research organizations. Regular engagements with MSMEs, start-ups, academia, and innovators will create a supportive environment for technological advancements at large.
Akash represents medium range defence system
Appointment of Chief of Defence Staff: Historically, each wing of the Indian Defence Forces, namely, the Army, Navy and Air Force had their own separate Chief of Staff. At times, this did not result in good coordination among the three services for meeting common needs like armaments, protective gear, night vision equipment, transportation vehicles and communication equipment. To get rid of this issue and for other strategic reasons, the government has appointed for the first time since the country’s independence a Chief of Defence Staff (CDS). This position has made it easier to promote domestic production, facilitating easier communication by the private sector for innovation and production.
Development of Indigenous Defence Technologies: India has already made significant strides in developing critical defence indigenous technologies. Among them are short and long-range missiles such as Agni and Prithvi, test firing of Submarine-Launched Ballistic Missile (SLBM), Supersonic Missile BrahMos, Light Fighter Aircraft Tejas and Tejas Mark II, Advanced Medium Combat Aircraft (under development), Light Transport Helicopter Cheetah and Light Combat Helicopter Prachand, Diesel and Nuclear powdered submarines INS Kaveri and INS Arihant Long-Range Heavy Gun Dhanush and Aircraft Carrier INS Vikrant.
Besides indigenous manufacture of armaments, weapons, ships, aircraft, helicopters and ships, India has also made progress in all-weather communications and surveillance technologies, which are key to achieving self-reliance in the defence sector.
The results are clearly visible. Between 2018 and 2022, expenditure on defence procurement from foreign sources reduced from 46% to 36% of the defence budget. Indigenous procurement in the total procurement of defence items increased from 54% in 2018 to 64% in 2021 and is expected to rise to 68% in 2023 as per a statement by the Defence Minister to Parliament.
In a short duration of about five years, India has been able to save huge foreign exchange, provide alternate supply chains to its armed forces, create a large number of new jobs and ramp up its defence production.
Boost to exports
While Atmanirbhar in the defence sector production has an ambitious target, the country has also set another target of achieving US$ 5 billion annually in the defence sector exports by 2025. As per reports, India is currently in talks with various countries to export several of its sophisticated indigenous items such as Tejas, BrahMos and Cheetah. About 50 Indian companies in the private sector have contributed to defence exports.
India is currently ranked 18 for defence items exports but this will keep rising.
India exports defence items to over 75 countries including Maldives, Vietnam, Cambodia, Sri Lanka, Russia, Malaysia, Egypt, Bhutan, Ethiopia, and the Philippines. Gone are the days when India was one of the largest importers of weapons and defence items.
Dr Rakesh Shukla is a businessman based in Auckland. He was earlier Country Manager (India) for Beca New Zealand and has taught at many tertiary institutions. Mr Shukla said that he wrote the above article based on his personal knowledge, by referring to articles and public domain resources.
