Special: India's defence industry is powering 'Aatmanirbharta'
By Girish Linganna | First Published Apr 9, 2023, 12:17 PM ISTThe defence industry in India has made considerable progress in achieving complete self-reliance in the manufacturing of defence equipment necessary for the country's armed forces, says Defence and Aerospace analyst Girish Linganna
Over the past few years, the Government of India has implemented various policies and changes to boost the creation, production and development of defence equipment within the country. The ultimate goal of these initiatives is to foster self-reliance in defence manufacturing across India.
Various measures have been taken in the recent past to promote domestic procurement under the Defence Acquisition Procedure (DAP), 2020. This includes the identification of 411 items of service and 3 positive indigenization lists of 3,738 items from the Defence Public Sector Undertakings (DPSUs) for which there will be an embargo on imports beyond specified timelines.
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The initiative also includes simplification of industrial licensing processes with longer validity periods, liberalization of foreign direct investment (FDI) policies and the launch of the Mission DefSpace and Innovations for Defence Excellence (iDEX) scheme, which involves start-ups and micro, small and medium enterprises (MSMEs).
Additionally, the Public Procurement (Preference to ‘Make in India’) Order, 2017, has been implemented, and the SRIJAN indigenization portal launched to facilitate the indigenization process for Indian industries, including MSMEs.
The implementation of certain policies has helped boost the development of various industries, particularly MSMEs, in the defence sector, leading to a significant increase in job opportunities. Unfortunately, the Ministry of Defence does not divulge the employment figures, as they are considered ‘confidential’ and ‘sensitive’ information.
The 'Aatmanirbhar Bharat' campaign has benefited India by promoting local production and design of defence equipment, leading to less reliance on imported goods. As of December 2022, the amount spent on defence purchases from foreign sources has decreased from 46% to 36.7% of the total expenditure compared to that in 2018-2019.
In the past three years, there has also been an increase in the value of defence production. During FY 2019-2020, the total value of defence production amounted to Rs 79,071 crore. In 2020-2121 and 2021-2022, the values increased to Rs 84,643 crore and Rs 94,845 crore respectively.
In recent years, numerous important projects have been completed through consistent efforts, such as the Dhanush 155mm Artillery Gun System, Advanced Towed Artillery Guns (ATAGs), Tejas Light Combat Aircraft, Akash Surface-to-Air Missile System, Arjun Main Battle Tank, T-90 Tank, T-72 Tank, BMP-II/IIK Armoured Personnel Carrier, Su-30 MK1, Cheetah Helicopter, Advanced Light Helicopter, Dornier Do-228, High Mobility Trucks, the INS Kalvari, the INS Khanderi, the INS Chennai, Anti-Submarine Warfare Corvette (ASWC), Arjun Armoured Repair and Recovery Vehicle, Bridge Laying Tank, Bi-Modular Charge System (BMCS) for 155mm Ammunition, Medium Bullet-Proof Vehicle (MBPV), Weapon Locating Radar (WLR), Integrated Air Command and Control System (IACCS), Software-Defined Radios (SDR), Lakshya Parachute for Pilotless Target Aircraft, Opto Electronic Sights for Battle Tanks, Water Jet Fast Attack Craft, Inshore Patrol Vessel, Offshore Patrol Vessel, Fast Interceptor Boat, Landing Craft Utility, and 25 T Tugs.
Since 2016-2017, Indian defence exports have risen by over eight times. In the past, defence exports were valued at Rs 1,522 crore. But now, the value has surged to Rs 13,800 crore. In April 2018, the Indian defence establishment launched Innovations for Defence Excellence (iDEX), an innovation ecosystem to promote technology development and innovation in the defence and aerospace industries.
The initiative engages industries like MSMEs, startups, individual innovators, R&D institutes and academia to carry out R&D that has the potential to be adopted for Indian defence and aerospace needs. iDEX provides grants, funding and other support to these entities. As of now, iDEX has opened 233 programmes, engaged 310 startups and signed 140 contracts.
Recently, iDEX launched the iDEX Prime framework to support startups with a grant-in-aid of up to Rs 10 crore for developing high-end solutions. As of October 2022, 366 companies in the defence sector have received a total of 595 industrial licences. According to DAP, 2020, guidelines, the Centre has approved 163 proposals for capital procurement that encourage domestic manufacturing with an estimated value of around Rs 246,989.38 crore between 2019-2020 and September 2022.
Over the years, the proportion of domestic procurement as a fraction of total procurement has risen significantly. Specifically, in 2018-2019, 2019-2020, and 2020-2021, the domestic procurement share increased from 54% to 59% and then to 64%. In the current year, the domestic procurement share has risen further to 68%, with 25% of the budget being allotted for procurement from private industry.
Over the past four years (2018-2019 to 2021-2022), the percentage of expenditure on defence procurement from foreign sources has decreased from 46% to 36% because of the government’s emphasis on promoting domestic production of defence products and achieving self-sufficiency in this sector.
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