Demonstrating a steadfast commitment to these tenets, the incumbent administration has taken momentous strides in advancing the indigenisation of defence technologies and manufacturing within India’s borders.
In the grand tapestry of global prowess, a nation’s eminence in science, technology, and economics finds a tangible measure in its capacity to arm its forces and lessen reliance on foreign imports. Demonstrating a steadfast commitment to these tenets, the incumbent administration has taken momentous strides in advancing the indigenisation of defence technologies and manufacturing within India’s borders. Central to this mission is the harnessing of the nation’s exceptional science, technology, and research talent base to cultivate novel capabilities in defence innovation. Notably, these initiatives bear the potential to fulfill not only the Armed Forces‘ requisites but also cater to the needs of friendly nations through the export of cutting-edge defence items.
Central Government’s Vision: Make in India, Make for the World
Unyielding in its pursuit of the Make in India and Make for the World objectives, the Central Government has orchestrated a series of far-reaching reforms. Among these reforms are measures to augment Foreign Direct Investment (FDI), the corporatisation of the Ordnance Factory Board (OFB), and the establishment of defence corridors in key states such as Uttar Pradesh and Tamil Nadu. Such strategic endeavors beckon foreign original equipment manufacturers (OEMs) to invest, manufacture, and subsequently export from the Indian terrain.
Fostering Advancements: Economic Reforms in the Defence Sector
The Indian Aerospace & Defence landscape has borne witness to a steady stream of measures aimed at curbing the incongruent revenue expenditure versus capital expenditure ratio. As part of the larger Ministry of Defence (MoD), the Indian Armed Forces have been granted a substantial share of the budget, aligning with approximately 1.5-2.5 percent of India’s Gross Domestic Product (GDP). It is noteworthy that the Indian Army, holding the distinction of being the second largest globally, commands a share surpassing 50 percent of the allocated Defence Budget.
However, the distribution of expenditures has painted a rather perplexing picture, wherein revenue expenditure, including salaries and allowances, eclipses capital expenditure devoted to equipment and infrastructure. Eager to redress this imbalance, the Government of India has been steadfast in its commitment to bolster capital outlay while concurrently ameliorating revenue expenditure. By doing so, the Armed Forces stand poised to embark on a trajectory of modernisation, strengthening their defence capabilities, and concurrently diminishing dependence on foreign imports. This endeavor has been anchored upon the principles of transparency and fostering the active participation of the private sector, critical steps in charting a sustainable course forward.
Zeroing in on the Need for Modern Equipment
A noteworthy departure from the past comes in the form of the General Shekatkar Committee, convened in 2014 to recalibrate the expenditure pattern and amplify India’s combat capability. The committee’s report, presented in 2016, unequivocally underscored the pressing need for change. As a result, the government unprecedented augmented the capital outlay by 19%, ensuring that the soldiers’ access to necessary equipment remained unhampered.
Paving the Way for Investments: Liberalisation of FDI Policy
Bolstering modernisation has necessitated a transformative outlook towards the defence manufacturing sector. As such, the Indian government has embarked on liberalising the FDI policy, paving the way for increased FDI in the Defence Sector, now reaching up to 74 percent through the Automatic Route and up to 100 percent through the Government Route, wherever access to cutting-edge technology could be provided. This move facilitates ease of doing business and is geared to attract more investments to expedite modernisation.
To further stoke investments, the establishment of the Defence Investor Cell (DIC) in February 2018 has proven instrumental, providing a singular point of contact for all defence production-related inquiries from entrepreneurs and the industry. This venture has successfully navigated over 1,100 queries since its inception. Further still, the policy envisages forging long-term strategic partnerships between Indian defence majors and foreign military firms, wherein joint ventures shall spring forth to erect domestic manufacturing infrastructure and robust supply chains, culminating in the local production of military platforms such as submarines, fighter jets, helicopters, and armoured vehicles/main battle tanks.
Making Strides Towards Self-Reliance: Level-Playing Field for Indian Industry
Committed to fortifying the domestic defence industry, the Indian government has introduced import embargoes and orchestrated reforms in the offset policy. The issuance of three ‘Positive Indigenisation Lists (PILs)’ comprising 310 weapons and military platforms for the Defence Services highlights the intent for a phased embargo on imports. Enclosed within these lists are an array of high-tech weapon systems, from artillery guns and cruise missiles to helicopters and radars, among others, fostering orders worth over INR seven lakh crores in the next half-decade.
Furthermore, the reform in the offset policy under the Defence Procurement Procedure (DAP) 2020 has been calibrated to incentivise investment and technology transfer for defence manufacturing. Extending such incentives to private industries underscores the government’s emphasis on attracting investment and facilitating technology transfers.
Defence Manufacturing Efficiency: Corporatisation of Ordnance Factory Board
A pivotal stride towards enhancing efficiency and productivity has been the corporatisation of the Ordnance Factory Board (OFB). Approved in May 2020, this restructuring effort has given rise to seven new Defence Companies, endowing OFB with functional and financial autonomy. By fostering managerial flexibility, this transformation has bolstered accountability and efficacy in Ordnance Supplies. The resulting swiftness has allowed the organisation to ascend as a significant player in India’s defence preparedness, safeguarding workers’ interests while empowering them to make a greater contribution.
Instituting Defence Testing Infrastructure Scheme (DTIS)
Recognising the capital-intensive nature of Defence Testing Infrastructure, the government formulated the Defence Testing Infrastructure Scheme (DTIS). Tailored to create six to eight Greenfield Defence Testing facilities within the nation, this initiative aims to facilitate easy access for domestic defence industries. The overarching goal of this venture is to bolster indigenous defence production, curtail imports of military equipment, and cultivate a self-reliant ecosystem.
As India charts its course towards self-reliance in the defence sector, the nation’s unyielding commitment to indigenisation, economic reforms, and strategic measures to foster investments illuminates a beacon of self-sufficiency. With a level-playing field, bolstered capabilities, and a streamlined defence manufacturing ecosystem, India takes firm strides towards securing its defence preparedness and solidifying its position in the global arena.
Revolutionizing Defence Procurement: Driving Towards Self-Reliance
In steadfast pursuit of the “Atmanirbhar Bharat” vision, the Indian government has unswervingly championed the procurement of defence equipment from domestic sources. A key outcome of this approach has been the fortification of private domestic manufacturers, including Micro, Small and Medium Enterprises (MSMEs) and start-ups, who now stand eligible to bid on projects alongside Public Sector Undertaking (PSU) shipyards. These transformative reforms have galvanized domestic defence acquisitions with heightened transparency, ushering in an era of competitive spirit underscored by principles of fairness, transparency, and equal opportunities for all.
Fostering Indigenous Design and Development: A Thrust Towards Self-Sufficiency
In line with its commitment to encouraging start-ups and promoting the indigenous design and development of defence equipment, the government has introduced the “Buy Indian-IDDM” (Indigenously Designed, Developed, and Manufactured) category as the most favored choice for procurement. The novel “Buy Global – Manufacture in India” category under the Defence Acquisition Procedure (DAP) 2020 has further bolstered domestic design capabilities in the defence sector. This innovative category facilitates the outright purchase of equipment from foreign vendors, followed by indigenous manufacture in India through subsidiaries, joint ventures, or Indian agencies, further catalyzing the nation’s self-reliance agenda.
Swift Amendments and Streamlined RFPs: Enhancing Efficiency
To expedite the procurement process and remove bottlenecks, the government has implemented faster approvals for amendments to contracts. The earlier impediment of prolonged decision-making for the extension of Delivery Period (DP) cases, requiring consultation with the Integrated Financial Advisor (IFA), has been resolved. Now, Competent Financial Authorities (CFAs) may approve all DP extension amendments, including Liquidated Damages (LD), without IFA consultation, promoting more expeditious decision-making.
Additionally, the simplification of Request for Proposal (RFP) documentation for shipbuilding and repairs has reduced overall requirements from Original Equipment Manufacturers (OEMs), streamlined procurement time, and fostered greater transparency. The prescribed format for calculating Indigenous Content (IC) has been elucidated for ease of bidder calculation, while categorization has been made more accessible for bidders.
Devolution of Financial Powers: Empowering Field Formations
In a strategic move to align procurement with the unique needs of India’s armed forces, the government has embarked on empowering service headquarters and field formations. The delegation of procurement powers to Service Headquarters (SHQs) and the enhancement of financial powers of Vice Chiefs up to INR 500 crore has engendered quicker decision-making, optimal planning, and heightened operational preparedness of the services. The devolution of emergency and special emergency financial powers to the armed forces for ammunition and spares procurement, along with special powers granted to SHQs, further amplifies operational readiness and resource utilization.
Terrain-Specific Equipment: Enhancing Acquisitions
Conscious of the imperative to acquire equipment tailored for diverse terrains, the government commissioned a study by the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA) on ‘Designing and Equipping the Armed Forces with Terrain Specific Equipment.’ The forthcoming implementation of the study’s recommendations will ensure the acquisition of terrain-specific equipment, leading to reduced timelines, optimal utilization, and cost-effectiveness.
Major Process Reforms: Advancing Self-Reliance
The drive towards self-reliance in defence manufacturing has spurred the Indian government to introduce several pivotal policies and initiatives. Digitization of processes has streamlined procurement and bolstered transparency. Checks and balances to restrict imports, coupled with incentives to promote exports and foster a conducive environment for Foreign Direct Investment (FDI), have catalyzed the domestic defence industry’s growth. Simplification of industrial licensing processes and provisions for the Make-I and Make-II Capital Acquisition Procedures have been integral to this transformative approach.
Promoting Innovation through R&D: An Era of Collaboration
Defence Research and Development (R&D) in India has undergone a paradigm shift, expanding its scope beyond government labs and research centers. In an unprecedented move, the government has opened up defence R&D to industry, start-ups, and academia, reserving a substantial 25 percent of the defence R&D budget to spur the development of cutting-edge technologies.
The Defence Research and Development Organisation (DRDO) has identified nine thrust areas for focused research, paving the way for innovative solutions in defence technology. The government has created the Defence AI Council (DAIC) and Defence AI Project Agency (DAIPA) to foster AI adoption in defence, with an AI roadmap in place to streamline development. Initiatives like the Technology Development Fund (TDF) and the new patent policy have been introduced to support industries, MSMEs, and start-ups in their R&D endeavors.
Driving Change at the Grassroots
Acknowledging the significance of connectivity and economic vitality in remote border regions for national security, the government has unveiled transformative initiatives. The Vibrant Villages Programme (VVP) and the Border Roads Organisation’s (BRO) strategic measures are propelling economic development and cross-border trade, bolstering border security and regional relations.
In conclusion, the Indian government’s resolute drive towards self-reliance in defence is manifesting through a comprehensive series of reforms, innovative policies, and strategic initiatives. As the nation’s domestic defence industry gains momentum, fueled by collaboration, innovation, and streamlined processes, India’s trajectory towards self-sufficiency in defence manufacturing becomes ever more promising. The cumulative impact of these transformative endeavors is poised to redefine India’s position as a formidable global player in the defence sector.
https://www.financialexpress.com/business/defence-a-nations-ascendancy-indigenisation-of-defence-and-reforms-propel-india-towards-self-reliance-3189809/
