Day 53 – Q 2.India’s defence sector is yet to achieve the level of indigenisation that is worthy of a developed nation. Do you agree? Substantiate.

2. India’s defence sector is yet to achieve the level of indigenisation that is worthy of a developed nation. Do you agree? Substantiate. 

भारत का रक्षा क्षेत्र अभी तक स्वदेशीकरण का वह स्तर प्राप्त नहीं कर सका है जो एक विकसित राष्ट्र के योग्य है। क्या आप सहमत हैं? पुष्टी करें।

Introduction:

As per the SIPRI (Stockholm International Peace Research Institute) report, India is the 2nd largest arms importer in the world. Though India has been spending around 2.4% of its GDP on defence, indigenous production has not reached the desired level.

Body

Lack of indigenization in defence sector:

• High import of components: The Comptroller and Auditor General of India (C&AG) highlighted the 90% import dependency of Hindustan Aeronautics Ltd (HAL) for ‘raw materials and bought out items’ for the production of indigenous.
• Foreign collaboration has been mainly for finished products procurement than on technology transfer. E.g. Rafale deal with France, Howritzer Artillery guns with USA, S-400f missiles with Russia etc., None of them involve technology transfer.
• Lack of R&D: Expenditure is only around 5-6% of defence budget which is inadequate. India’s Defence Research and Development Organization (DRDO) is ill equipped to produce the kind of high-quality research and tech that’s essential for domestic companies to flourish.
• Technological backwardness – While developed countries have advanced technologies and developing next generation defence equipment, India lags behind. E.g. LCA Tejas of India vs F-22 Raptor with stealth capabilities.
• Private sector participation: with reserved sectors and uncertainty in defence policy and lack of predictable long-term requirements, the private sector is reluctant to invest in defence which has hampered the indigenization. 
• Lack of production companies: There are only 8 Defence PSUs and 41 Ordnance Factories. This – without any participation of the private sector is inadequate for defence production.
• Inadequate production setup: Except for the recent defence corridors established, India doesn’t have large defence production areas with a strong supply chain for defence production.

Indigenization in defence sector:

Indian defence indigenization has progressed over the years with increased production, investment in r&d, innovation promotion. The following shows that India has fared well in domestic development and production in defence sector:

• From leasing INS Viraat from USSR/Russia, INS Vikrant was built being the first aircraft carrier to be built in India for the Navy.
• Tejas – light combat aircraft (LCA) was designed and developed completely in India by efforts of Aeronautical Development Agency and HAL.
• Defence ministry has undertaken various indigenous development projects like
  • Project 75: Indian Navy’s indigenous submarine programme which includes INS Kalvari, INS Khanderi etc.,
  • Project 15B: development of class of stealth guided missile destroyers.
• Arihant: first indigenous nuclear submarine was developed in association with BARC and DRDO.
• Agni-5 was developed indigenously under integrated guided missile development which is n ICBM (Intercontinental ballistic missile). Also, Dhanush, Nirbhaya, Prithvi, Akash missiles have also contributed to indigenization of defence.
• The Pinaka Multi Barrel Rocket Launcher is developed indigenously with near zero error possibility.
• Brahmos is designed and developed indigenously with joint collaboration with Russia.
• Arjun Tank is a third-generation main battle tank developed by DRDO. Also, Anti-Tank missiles like Nag are developed by DRDO including variants like Heli-Nag.
• Long-range artillery gun “Dhanush” called as desi Bofors has 81% of its components are indigenously sourced.
• Government policies are promoting indigenous defence production like
  • Research projects: through schemes like Innovations for Defence Excellence (iDEX), funding under Defence Innovation Fund (DIF), Technology development fund
  • Under the new Defence Procurement Procedure (DPP) 2016 promulgated in 2016, the ‘Make’ procedure has been simplified.
  • Strategic partnership model was announced which has promoted private sector participation.
  • Promotion through Make In India policy with local sourcing requirements, tax benefits etc.,

Challenges to defence indigenization (Not required in the answer):

• Lack of an institutional capacity and capability to take it to its logical conclusion.
• The private sector participation is abysmal. E.g.  “Make” procedure for ICVs failed to achieve the results with just four companies competing for one weapon system.
• The decision-making bodies lack autonomy and authority. There is an urgent need of a permanent arbitration committee which can settle disputes expeditiously. E.g. In USA, the procurement agency DRAPA has a permanent arbitration committee which resolves such issues amicably and their decision is final.
• There is a lingering fear that the Indian strategic partners having committed their funds to infrastructure and getting the initial order would lose out to the DPSUs in the long run. This would sound the death knell of this well-intentioned idea.
• Land acquisition issues restrict entry of new players in the defence manufacturing and production.
• Some procurements are essential part of foreign diplomacy and has strategic interests.

Conclusion

Thus, though India has yet to reach its potential in defence indigenization, the production has increased and is being continuously promoted. Further promotion through streamlining private participation with long term policies, increasing r&d expenditure, establishing defence industrial corridors etc., will not only strengthen our defence capabilities, but also generate employment opportunities, improve supply chain management and technological development.