Source: The Hindu
Prelims Take away: India’s SIPRI Ranking
Mains: Challenges for Indigenous defence production
What is Indigenous Defence Production?
Indigenous defence production refers to the development and manufacturing of defence equipment and technology within a country’s own borders, using its own resources, skills, and industries. This approach aims to achieve self-reliance and reduce dependence on foreign imports for defence needs.
According to the Stockholm International peace research, India was the world’s largest importer of major arms between 2019 and 2023, accounting for 9.8% of global arms sales
Need for defence indigenisation:
- For self-reliance
- To reduce dependency on the foreign player and ensure the security of the nation
- To reduce the Balance of Payment deficit
- To promote employment and also exports
- To reduce the cost of production to India and thereby reduce fiscal deficit.
Key Highlights of India’s Defence Production:
- Over 79% of defence production was contributed by DPSUs/PSUs, and nearly 21% by the private sector.
- Since 2019-20, the value of defence production has increased by over 60%.
- By 2028-29, annual defence production is expected to reach ₹3 lakh crore, with defence exports hitting ₹50,000 crore.
Background of Defence Indigenisation in India:
India shifted from Soviet-dependent license-based production to indigenous design-focused defence industrialization in the mid-1980s, emphasizing R&D. A significant step was the 1983 integrated guided missile development programme for developing five missile systems: Prithvi, Akash, Trishul, Nag, and Agni. Despite the 1990 Self Reliance Review Committee’s goal to boost the self-reliance index from 30% to 70% by 2005, this target remains unmet. Insufficient indigenous efforts led to co-development and co-production with foreign partners, starting with the 1998 India-Russia BrahMos missile agreement, and extending to collaborations with Israel and France.
Potential of Defence Indigenisation in India:
1. Rising Demand: The Indian defence manufacturing industry is growing due to national security concerns and ongoing territorial disputes with Pakistan and China.
2. Growth Opportunities: India’s proactive foreign trade policies and joint defence manufacturing agreements with countries like the UAE, Kazakhstan, and the US offer significant growth potential. 3. Experienced Industry: India has the necessary manpower and industries, such as the Ordnance Factory and HAL, actively contributing to defence indigenisation. Three Indian companies (HAL, Ordnance Factory Board, BEL) are among the top 100 defence companies globally.
4. Future Contracts: The defence ministry estimates potential contracts worth ~₹4 lakh crore (US$ 57.2 billion) for the domestic industry in the next 5 -7 years (2025-2027).
Challenges in Defence Indigenisation
1. Lack of a defence manufacturing base in India.
2. Low private participation due to the absence of a permanent arbitration committee for dispute resolution.
3. Conflict between manufacturers and defence forces on equipment design and capacity.
4. High costs and lack of an assured market, lead to delays and credibility issues.
5. Poor technological transfer by foreign companies.
6. Bureaucratic delays and licensing issues hinder the ease of doing business.
Way Forward
- Ensure a level playing field for private industry, DRDO, DPSUs, and OFB.
- Utilize software industry and technologies like AI and cyber security.
- Provide financial and administrative autonomy to DRDO.
- Improve in-house design capabilities, as seen with the Navy’s success.
- Develop a robust supply chain, with Indian SMEs playing a key role in the global OEM supply chain.
Conclusion: Going ahead, the requirement for higher indigenous content is expected to help defence product manufacturers in India as well as encourage foreign companies to set up operations in India. France and Russia have already agreed to manufacture in India