Indigenisation in defence sector: Status, Challenges and opportunities
India was the largest importer of arms in the world in the year 2016 and 2017, as per report released by Stockholm International Peace Research Institution, a global NGO working on disarmament and reducing arms race.
Even now, in 2018-19, India continues to be the 2nd largest arms importer and on average 70% of defence’s need is met by imports.
According to a report of Parliamentary Standing Committee on Defence, India is only 30-35% self-reliant in defence manufacturing. Hence, there is an immediate need for indigenisation in the defence sector.
What does Indigenisation in defence sector refer to?
Generally, indigenisation means the production of goods or service in the domestic market, under control of a country’s nationals. It also refers to the shift of self-reliance from import dependence via rapid domestic manufacturing to fulfil the need for domestic consumption.
In the same line, indigenisation in defence sector broadly refers to reducing foreign import by enhancing domestic production, thus promoting self-reliance and parallelly saving large foreign exchange reserve( forex). Eg: Production of light combat Aircraft Tejas by Hindustan Aeronautics Limited.
Status of indigenisation in the defence sector
Around 70% need to be met by import, India’s indigenisation is not promising. As stated by different committees like Dhirender Singh, Lt. general DB Shekatwar as well as Kargil Review Committee under K Subramaniya, India lacks in indigenisation by multiple yardsticks. As recently noted by the parliamentary standing committee, India is reliant only up to 30-35%.
India continues to remain highly dependent on imports from countries like Russia (Eg: S 400 triumph missile defence), France (Rafale Aircraft), Japan (US-2 amphibian aircraft), USA (Chinook, Sea Guardian drove etc.) and Israel ( Howitzer gun).
However, recently India has witnessed the emphasis on indigenisation. The production of world’s highest and agile LCA Tejas by HAL, along with indigenous production of INS Arihant(nuclear submarine), Indian Navy’s project P75I etc reflects the growing culture of indigenisation in recent times.
Causes for lack of indigenisation in defence sector:
Traditionally, in India, the production of defence equipment, arms, ammunition etc has been dominated by Public Sector Undertakings (PSUs).
The poor performance of PSUs, along with wit lack of research and development (R&D), along with a deficit of innovation, forced India to go for foreign import.
The issue of red-tapis, bureaucratic interference, cost and time overrun along with perennial scams, resulted into foreign reliance for the emerging state of the art technologies.
Challenges in indigenisation in defence sector:
Economic Challenges: The lack of expenditure on R&D to develop state of the art technologies, equipment also, the distrust towards the private sector historically, impedes their integration in defence manufacturing.
Further, the Stringent Foreign Direct Investment (FDI) norms for a long time has been a perennial challenge.
Political Challenge: The lack of transparency and accountability in defence deal auctioning along with an absence of standard operating procedures in finalisation of defence contract emerges as a major challenge in defence indigenisation.
Technological Challange: In absence of heavy spending on R&D, India lacks technological proficiency needed. The district towards the private sector has resulted in a lack of modern innovation in India.
The reluctance on part of foreign major defence partner to share technological know-how has limited indigenisation effort, unlike space sector where countries like Russia exclusively cooperated during the cold war period.
Security Challenges: India being surrounded by two nuclear-armed neighbours (Pakistan and China) along with various internal security challenges like terrorism by non-state actors (LeT etc), Naxalism, North-east insurgency etc need up-gradation of defence equipment on a continuous basis.
In contrast, indigenisation is a long term process. hence, India has to go for imports.
However, despite all these challenges there exists a huge opportunity for indigenisation in the defence sector in India.
Opportunities in indigenisation in defence sector:
India, being dependent for 70% of its arms, need to hold the huge untapped opportunity to meet its need by indigenisation.
The initiatives like Make in India, Skill India, Start-Up India along with huge demographic dividend can make India self-reliant in defence consumption.
The proficiency and innovation of the private sector like Reliance, Adani Group, L&T along with foreign collaboration can provide a great opportunity for indigenisation.
Further, India can increase expenditure on R&D in the defence sector, along wit impetus on innovation and IPRs can help India emerge as a major manufacturer of arms and ammunition.
There exists a huge opportunity in indigenisation with the viewpoint of increasing exports as well. India being a regional player in South Asia and emerging power globally can utilise its manufacturing potential to export arms to countries like Maldives, Vietnam, Srilanka, Mozambique etc. This will help India earn huge forex and clout in regional and global defence architecture.
Recent Steps were taken for promoting indigenisation in defence sector:
Various steps under present govt have been taken to promote self-reliance in defence manufacturing.
The steps like launching of Mission Raksha Gyan Shakti by Dept of promotion of Industry and Internal Trade(DPIIT) has given impetus to innovation promotion and IPRs regime in the defence sector.
The launching of the Strategic Partnership Model based on the recommendation of Dhirendra Singh Committee is a welcome step. Under this, a domestic private company will collaborate with a foreign company to share defence manufacturing know-how along with transfer of equipment, knowledge etc eg collaboration between reliance industries and French’s Dassault company.
Further steps taken include earing FDI norms in the defence sector(up to 49% in most sector and 100% in selected). Further, increasing participation and assimilation of the private sector like the opening of L%T’s K9 Vajva gun-manufacturing unit reflects the encouraging trend of public-public partnership in defence indigenisation.
Way forward of defence indigenisation:
India being a leading nation in armed forces with 3rd largest army, along with 6th largest in space and nuclear technology- holds huge potential in defence sector indigenisation.
With the ambition to emerge as USD 5 trillion economies by 2024-25 along with increasing debt in global affairs. India must go for rapid indigenisation. The steps like promoting PPP, increasing R&D based expenditure, earing FDI norms is welcome steps.
Further, indigenisation will help India reduce dependence on a foreign country and will increase its defence capability.
Indigenisation is the need of the hour in face of rising aggression of China in Indian ocean along with malicious Sino-Pakistan nexus.
Thus, we should promote indigenisation at war-footing mode to emerge as a major defence force globally. As recognised by Kautilya in Arthashashtra, the self-reliance in defence is primordial to counter any internal or external challenges, hence indigenisation is the need of the hour.