Emergence of India as Defence Manufacturing Hub
The Backdrop
The first seven months of
2020 have embroiled the entire globe in an unforeseen turmoil with the
equations changing in the geo-political environment resulting in likely
emergence of a new world order and renewed national alliances, especially with
an anti-China sentiment. This has not only has changed the outlook towards
lifestyle but also the shifting of business and industrial units. The
turbulence due to Sino-US tension duly fuelled by the COVID-19 and bullying of
countries by China has seen the emergence of India as a major epicentre of
power and influence in the world. While the economy of countries reels under
the effect of COVID-19, the initiatives by Modi government like “Digital
India”, “Make in India”, and “Aatmnirbhar Bharat” etc have resulted in making
India a safe and futuristic manufacturing hub.
The Defence Sector Scenario
The western countries have
always projected India as a down trodden country with little scope for
progress. A few years back, India was hardly considered as a producer/ manufacturer
in defence sector and never considered a serious player in the geo-political
scenario. The legacy in post-British era only constituted of few Ordnance
factories with no participation in research and development. Although, in 1958,
DRDO was constituted, however, the contribution of DRDO remained lustreless
till the “Missile Man”, Hon’ble Dr APJ Abul Kalam brought the Indian Missile
programme to a standing.
During and after 1980’s, the
defence sector manufacturing has taken a surge which is very evident by the
following indigenous projects, which not only showcases the present capacity
and capability of the Indian manufacturers but also is an indicator that the
Indian defence sector is now mature enough to emerge as a defence manufacturing
hub and a major exporter. While the indigenous weapons can be exported to third
world countries, the manufacturing hub can offer services to advanced
countries, thereby promoting economy, technology and skills.
- Indian forces
are using numerous successful indigenous technologies produced by the DRDO,
including Varunastra, Maareech, Ushus, TAL by navy; Electronic Warfare
Technologies, radars, composite materials for LCA, AEW&C, Astra, LCA
Tejas by airforce; and ASAT, BrahMos, ASTRA, Nag missile, Prithvi, Akash
missile system, SAAW, Arjun MBT Mk 1A, 46 metre Modular Bridge, MPR, LLTR
Ashwin by the army
- Strong focus on self-reliance,
with all naval vessels including submarines on order, being constructed in
India and a drop in expenditure on capital procurement from foreign vendors
from INR 35,082 crores in 2013-14 to INR 22,422 crores in 2015-16.
- DRDO has reached advanced stages of
completion in key projects such as the Long Range Surface to Air Missile
(LRSAM), the Astra Beyond Visual Range Missile (BVRM), Airborne Early Warning
and Control System (AEW&CS) and the Rustom-II Unmanned Ariel Vehicle.
- The indigenously developed warships INS Kochi
and INS Kolkata have been commissioned with the INS Kalvari Attack Submarine
undergone sea-trials.
- Since 2015, major Aerospace & Defence
companies such as, Airbus and Mahindra Defence Systems, Boeing with Tata
Advanced Systems Lockheed Martin, and Safran already have a footprint in the
Indian market, to manufacture military helicopters, the fuselage of Apache
helicopters.
- India is also in the process of jointly
developing a fifth-generation stealth combat aircraft with Russia under the
PAK-FA program
- Sale of first indigenously designed and built multi-role offshore patrol vessel (OPV)
named Barracuda, to Mauritius and sale of indigenously developed lightweight torpedoes worth US$37.9
million to Myanmar.
- Ordnance Factory Board (OFB) secured its biggest export
order from UAE for the supply of 40,000
numbers of 155 mm artillery shells for Rs 322 crore and supply another
50,000 artillery shells
- Reliance Defence has
set up a joint venture, Dassault
Reliance Aviation Limited (DRAL), with Dassault
will see an investment capped at$100 million (Rs 850 crore) for setting
up a plant to manufacture parts for Falcon executive jets,
- The top 10 indigenous
production includes DHRUV utility helicopter, DHANUSH howitzer, NAG anti-tank
missile, Pinaka Multi Barrel Rocket Launcher, Akash Missile System, Arjun MBT,
RISAT (Radar Imaging Satellite), LCA Tejas, Agni 5, Prithvi Air Defence
(Anti-Ballistic Missile).
Steps
taken by Govt to Boost Defence Exports
India has recently allowed the private sector to enter the defence
production. India’s defence exports were INR 4,682 crore (US$0.66 billion)
in 2017–2018 and INR10,500 crore (US$1.47 billion) in 2018–2019 and are
expected to increase exponentially in next few years due to aggressive measures
taken up by the govt since 2014. Defence Production Policy of 2018 (DPP-2018) has a goal of being among
the top 5 global producers of the aerospace and defence manufacturing
with an annual export target of US$5 billion by 2025. Various steps taken by the govt in this regard are:-
- The Make in India in Defence scheme has resulted in substantial growth
of defence export 700% in just two years, from $213 million in FY 2016-17 to
$1.5 billion in FY 2018-19. Encouraged by this, the government set a target
of achieving defence export worth $4.87 billion (Rs 35,000 crore) by 2021.
- Efforts to get FDI in defence sector
by first raising the cap from 26% to 49% through automatic route and 100%
through MoD’s approval, whereby the investing foreign entity can have ownership
up to 100% in the defence manufacturing.
- Introduction of various categories of defence
projects such as Buy Indian-IDDM(Indian Designed, Developed and Manufactured),
Buy Indian, Buy Global, Buy & Make(Indian), Buy &Make is likely to
boost the PSUs as well as private industry
- Liberalised and transparent policy for granting
Industrial licences
- Funding of private sector design
and development projects with a special focus on the Medium and Small
Manufacturing Enterprises (MSME) Sector
- Streamlining of defence exports
resulting in a significant increase of the same.
- Defence cooperation agreements and memorandums with
20 countries
- Strengthening of strategic partnerships with USA,
Russia and EU nations to facilitate the transfer of technology
- Govt of India banned the import of 101 defence
items to boost indigenous production in consonance with Modi govt’s Atmanirbhar
Bharat.
The Way Ahead
While the govt has taken
significant and encouraging steps to promote defence manufacturing and exports,
the bureaucracy and industries need to gear up to meet the challenge. In order
to compete with Tier 1 manufacturers, it is recommended that the following
steps be taken at various levels
- Bureaucracy In
the past, companies have been known to shy away from setting up manufacturing
plants in India due to complex and cumbersome procedures and inordinate delays.
The bureaucracy should design, plan and implement a single window, online,
user-friendly procedures for grant of licences for setting up plants, exports,
imports, attracting FDI. In addition, a corruption-free environment will be a
major attraction and added environment.
- Industries
and Directorate General of Quality Assurance (DGQA) The products need to meet
various quality standards in order to be able to compete with foreign
manufacturers. In this regard, while the industries need to undertake R&D
as well as upgrade the technology base and skills of workers, the DGQA is
expected to whole-heartedly support them as regards testing and certification of
the products, assemblies, sub-assemblies and components. In view of this, the
following issues will be significant
- Designing
policies and procedures for quality assurance and testing. These will have to
be customised for each product including COTS/ MOTS items.
- Laying
down and implementing a strict time plan. For this purpose, additional testing
facilities and staff may be required in the country.
- The
Directorate of Standardisation needs to speed up the process of correlating and
allocating cat part numbers to avoid unnecessary delays
- Steps to
reduce brain drain from the country and promote R&D, think tanks for
defence sector. This needs to be a deliberate attempt at the level of
industries, govt, prestigious institutes as well as organisations.
Vipul Mehrotra
Author is a seasoned management professional. Honourable Member of various Think Tanks and Associations in Defence & Security. He contributes in multiple research organizations and publications with his domain expertise in Defence & Security. He can be reached through his LinkedIn Profile: www.linkedin.com/in/vipul-mehrotra
Col Manoj Mehrotra
Author is an alumnus of the National Defence Academy and has now retired after 33 years of service. He was commissioned in the Army Air Defence and has a rich experience in different designations as well as locations. He has also been Principal Consultant to Department of Urban Development, Govt. of MP for Smart City Projects. He can be reached at his email manoj_42ch@yahoo.co.in.
Thanks Ajay…..we have tried to bring to limelight…that we are placed firmly and are in the race. I agree about your Third party certification point….but this is is a prerequisite and is invariably done through DGQA, STQC, various govt approved test labs in the country…..Jai Hind