There has been a tremendous push towards self-reliance in India’s defence manufacturing under the “Make in India” initiative launched in 2014 and the “Atmanirbhar Bharat” policy in 2020. Initiatives towards reducing dependence on defence imports and expanding indigenous production through R&D and strategic partnerships have been yielding promising results.
LT GEN KAPIL AGARWAL (RETD)
FOR THE NEWS ANALYTICS JOURNAL
a 4 mins read.
The Make in India initiative was launched on 25 Sep 2014 while The Atmanirbhar Bharat policy was unveiled on 12 May 2020. In both these programs, Defence Manufacturing occupies major space. While the overall objective of the Government of India is to increase the share of manufacturing in the GDP to 25% by focusing on 25 different sectors, attention is undoubtedly on Defence due to the sheer size of defence imports every year. As per the latest SIPRI report, India continues to hold the title of the world’s largest arms importer, despite ongoing efforts to bolster its defence-industrial base. The government has stated the objective of increasing the capital procurement for defence from indigenous manufacturers to 75%. Such policy announcements open up massive opportunities for the defence manufacturing sector.
CUTTING-EDGE TECHNOLOGIES
Weapon systems and platforms required by the defence forces invariably involve a convergence of top-notch cutting-edge technologies. Thus, a fighter aircraft employs state-of-the-art aeronautical engineering, jet engine technology, avionics, sensors, fly-by-wire technology, precision-guided munitions, surveillance and Electronic Warfare technologies etc.
An Armoured Fighting Vehicle or a Tank is a system of systems integrating mechanical engineering (power pack), Armament Technology, Fire Control System, Sighting System, Gun Control System, Communication System, NBC Protection etc. In all such weapon systems or platforms, prowess in Metallurgy, Rubber Technology, Control systems etc is a must. It is difficult, if not impossible, for a single manufacturer or entity to have all the capabilities required in producing or integrating a particular defence equipment.
In such a technological scenario, If India can move from the estimated self-reliance level of 25 – 30% to a figure of 75 – 80%, the goal of self-reliance should be considered as achieved. One critical factor, in the development of new technologies and their employment in the design and manufacture of defence equipment, is the investment in R&D. At present, India spends only approx. 0.7% of GDP on R&D, which is much lower than the global average of 1.8%.
Countries like the US and China reportedly spend about 2.8 % to 3.5% of their GDP on R&D. Israel, a major exporter of defence technologies is the top spender, with almost 6% of GDP on R&D. China is continuously increasing its R&D investments for the last 25 years and is expected to surpass US by 2026. Because the GDP of the US/ China is 6 to 8 times bigger, the enormity of asymmetry in Defence R&D spending can be comprehended. Consequently, as per Global Innovation Index 2023, India’s global ranking is a lowly 40th, though an improvement from an earlier rank of 53.
The Defence Procurement Procedure (DPP) aims to establish long-term strategic partnerships with Indian firms through a transparent process, collaborating with global OEMs for technology transfers to build domestic manufacturing and supply chains.
PROMOTIONS AND INCENTIVES
Defence manufacturing is not only a function of national economic resources allocation, i.e. R&D budget/ NRF but also depends on the industrial base existing in the country. This industrial ecosystem involves both the public and private sectors, wherein their respective strengths need to be synergised. Since, the design, development and manufacture of defence equipment require long gestation periods, the private sector industries need to be suitably incentivised.
The government has been steadily increasing the FDI limits in the defence sector which is presently at 74% (automatic route) and 100% (government route) to make the Indian defence industry an attractive investment destination. Foreign Original Equipment Manufacturers (OEMs) can avail cost advantages of manufacturing in India and exporting to other countries. Since technology infusion requires the industry to collaborate with foreign OEMs; Indian and foreign OEMs should set up Joint Ventures and Special Purpose Vehicles which include both, manufacturing and R&D. The government may also consider expanding the Production Linked Incentive schemes in a few carefully chosen defence manufacturing sectors.
ENVIRONMENT OF EASE
The Defence Procurement Procedure (DPP) envisages the establishment of long-term strategic partnerships with Indian entities through a transparent and competitive process, wherein they would tie up with global Original Equipment Manufacturers (OEMs) to seek technology transfers to set up domestic manufacturing infrastructure and supply chains. Initiatives like IDEX, i.e. Ideas for Defence Excellence, launched in 2018, also hold huge potential by integrating Startups, MSMEs and R&D establishments.
Setting up of two Defence Industrial Corridors in UP and Tamil Nadu, announced in 2018-19, is a step in the right direction. The aim is to attract foreign investments for which the respective state governments have also published Defence and Aerospace policies. Perhaps more such corridors can be set up in industrialised states like Maharashtra and Gujarat. What is also of importance is that single window clearances are facilitated, licensing simplified (validity already increased from 3 to 15 years), manufacturing of more parts delicensed and regulatory mechanisms eased out.
As per the PIB release, Defence production has already crossed the Rs 1 lakh crore in 2023. A number of policy reforms have been undertaken to achieve the objective of ease of doing business, including the integration of MSMEs and start-ups into the supply chain. There has been almost a 200 per cent increase in the number of defence licenses issued to the industries in the last 7-8 years.
Planners of futuristic weapon systems should avoid overly diverse requirements, focusing instead on an optimal mix of specifications to create a realistic design challenge.
INTERNATIONAL MARKETS
India is now steadily increasing its domestic defence manufacturing capabilities, while simultaneously increasing exports of the hardware to friendly foreign countries. In fact, India is now ranked in the top 25 countries in defence exports with the export figure reaching Rs 21,083 crores in 2023-24. This is a 31 times increase since 2023-14. Notable export deals include the supply of 155 mm artillery guns and Teevra 40 mm guns to the Indonesian Navy.
There is a $ 250 million contract for the supply of Pinaka missiles to Armenia. India is also finalising missile deals with Indonesia, following the $ 375 million Brahmos missile agreement signed with the Philippines last year. As part of foreign collaborations, India will be manufacturing aerostructures for Boeing’s AH-64 Apache helicopters. There is a deal with Airbus Defence and Space to produce C-295 medium-lift transport aircraft. During the last visit of the PM to the US, procurement of 31 Predator 9 QB drones was announced, which is accompanied by the establishment of a global MRO set up in India which will be a harbinger of exports in future.
In fact, arms deals in the international market are also an important indicator of the degree of self-reliance a nation has achieved in the realm of defence. As of now, there is no reliable way to determine the overall degree of indigenisation in defence since each indigenously manufactured system may have a number of imported components. A simpler way to determine the Index of Atmanirbhrta in Defence could simply be the ratio between the Export and Import of defence equipment.
CHANGE IN MINDSET
It is felt that no amount of R&D or policy focus would lead to desired outcomes in defence manufacturing unless it is accompanied by a significant change in mindset. Lessons can be drawn from the case studies of Project ARJUN (initiated in the 1970s) and the Light Combat Aircraft (LCA) program (1980s). Both have had significant cost and time overruns, despite having significant imported content.
The planners for any futuristic weapon system/ platform must refrain from formulating an eclectic mix of Qualitative Requirements. Perhaps, there is no weapon system or equipment in the world which is best in class in all possible parameters. Thus, the focus should be on an optimal mix of technical specifications which will give a realistic design challenge to the Developing Agency.
Private Sector has to be encouraged and provided a level playing field. Transfer of Technology (ToTs) available with PSUs, whenever feasible, should be transferred free of cost to private sector manufacturers. Handholding by the government, especially for MSMEs is imperative. Unlike the FICV program, which started in 2006 and closed 15 years later where big industry would have absorbed losses but MSMEs would have been devastated; it should not happen again.
AMBITIOUS TARGETS
Self-reliance in defence manufacturing is a strategic imperative for India. As a regional Indo-Pacific power, India’s dependence on imports is a critical vulnerability. India’s defence manufacturing, although poised on a transformational cusp, has an arduous journey ahead before it can enter the league of self-reliance. Many of the impediments of the past, which retarded progress, are being addressed. The government has set ambitious targets for indigenisation and its recent policies are aimed at enhancing existing capacity and improving efficiencies in defence manufacturing.
The entry of the private sector also bodes well for the future. However, there are still areas where the pace of change could be accelerated. The emergence of India as a defence manufacturing hub not only to meet its own security requirements but for the entire region will depend on the nation’s ability and inclination to walk the talk in ensuring that its progressive policies are implemented in letter and spirit. Only, after the simultaneous success of all initiatives, Defence Manufacturing can firmly set itself in the fast lane and march towards self-reliance.
(Lt Gen Kapil Agarwal (Retd), former Director General EME. He is an alumnus of IIT Kharagpur, having done MTech (Electronics). The views expressed are of the author and do not necessarily reflect the views of The News Analytics Journal.)
