Indigenisation of Indian Defence Sector | General Awareness & Knowledge - Bank Exams PDF Download

Introduction

Indigenization in the context of defense refers to a nation's ability to develop and produce its own defense equipment within its borders. This strategy serves a dual purpose: achieving self-reliance and reducing the reliance on imports. It involves creating a comprehensive ecosystem for designing, developing, and manufacturing various types of defense equipment within the country. 

Key Players in Defense Indigenization

Several entities play critical roles in the indigenization of defense industries:

• Defence Research Development Organisation (DRDO): Leading the charge in research and development for indigenous defense technology.
• Defence Public Sector Undertakings (DPSUs): State-owned enterprises involved in manufacturing defense equipment.
• Ordnance Factory Board (OFB): Responsible for the production of ordnance and related equipment.
• Private Organizations: Private companies are increasingly contributing to defense indigenization efforts.

Importance of Defense Indigenization

Defense indigenization is crucial for various reasons:

• Self-Defense: India, with its proximity to hostile neighbors like China and Pakistan, must bolster its self-defense capabilities.
• Strategic Advantage: Achieving self-reliance enhances India's geopolitical standing as a net security provider.
• Technological Advancement: Advances in defense technology have spillover effects, catalyzing growth in other industries and boosting the economy.
• Economic Drain: Excessive reliance on defense imports leads to a substantial economic drain.
• Employment: Defense manufacturing generates job opportunities across various sectors.

Background

India's journey toward defense indigenization and self-reliance has been marked by several key developments and changes in approach:

• Shift from Licence-Based Production to Indigenous Design:
  • Historically, India relied on the Soviet Union for defense equipment, often involving licence-based production.
  • Overdependence on foreign sources led to a shift in approach toward indigenous design and production.
• Investment in Research and Development (R&D):
  • Starting from the mid-1980s, the Indian government allocated significant resources to boost research and development in the defense sector.
  • The focus was on enabling the Defense Research and Development Organisation (DRDO) to undertake high-profile projects.
• Integrated Guided Missile Development Programme (IGMDP):
  • A major milestone in defense indigenization was the sanctioning of the IGMDP in 1983.
  • The program aimed to develop five missile systems, including Prithvi, Akash, Trishul, Nag, and Agni ballistic missiles with different ranges.
• Self-Reliance Review Committee (SRRV):
  • In 1990, the SRRV, under the leadership of Dr. A.P.J. Abdul Kalam, formulated a 10-year self-reliance plan.
  • The plan aimed to increase the self-reliance index (SRI), defined as the percentage share of indigenous content in total procurement expenditure, from 30% in 1992-1993 to 70% by 2005.
  • However, this target has not been achieved to date.
• Shift Toward Co-Development and Co-Production:
  • Recognizing the limitations of indigenous efforts, India shifted its focus toward co-development and co-production in collaboration with foreign companies.
  • An early example of this was the 1998 agreement with Russia to jointly produce the BrahMos supersonic cruise missile.
• International Partnerships:
  • India has sought partnerships with various countries, including Russia, Israel, and France, for defense projects.
  • These collaborations have enabled access to advanced technology and expertise.
• Ongoing Challenges:
  • Despite efforts, achieving complete self-reliance in defense production has remained a challenge.
  • India continues to rely on imports for certain defense equipment and technologies.
  • Overall, India's defense indigenization journey has been marked by a transition from foreign dependence to a combination of indigenous development and international collaborations. The goal of achieving greater self-reliance in defense production remains a work in progress.

Why Indigenisation?

The push for indigenization in India's defense sector is driven by several important factors and considerations:

• Reducing Fiscal Deficit:
  • India's high dependence on arms imports contributes significantly to its fiscal deficit.
  • Despite having a substantial defense budget, a large portion is allocated to purchasing foreign weapon systems.
  • Increasing indigenization can reduce the fiscal burden associated with imports and improve economic stability.
• Export Potential:
  • Developing indigenous defense technology and equipment opens up opportunities for exporting these products to neighboring nations.
  • Exporting defense equipment can not only enhance India's economic prospects but also strengthen its geopolitical influence.
• Security Imperative:
  • Indigenization is critical for national security as it ensures self-reliance in defense capabilities.
  • It helps maintain technological expertise and encourages innovation, which is vital for addressing security threats effectively.
  • With India facing threats like cross-border terrorism and ceasefire violations, self-sufficiency in defense becomes paramount.
• Geopolitical Considerations:
  • India's strategic location, surrounded by porous borders and sometimes hostile neighbors, necessitates self-sufficiency in defense production.
  • Relying on foreign suppliers for critical defense equipment can pose vulnerabilities in times of conflict or geopolitical tensions.
• Employment Generation:
  • Defense manufacturing has the potential to create a robust satellite industry, leading to the generation of employment opportunities.
  • This is particularly significant in a country with a large and aspiring workforce.
• Strategic Capability:
  • Achieving self-sufficiency and self-reliance in defense elevates India's status as a global power.
  • It enhances its strategic autonomy and influence on the world stage.
• Nationalism and Patriotism:
  • Indigenous production of defense equipment fosters a sense of nationalism and patriotism.
  • It instills trust and confidence in the Indian armed forces while strengthening the nation's integrity and sovereignty.

In summary, the drive for indigenization in India's defense sector is motivated by economic, security, geopolitical, and socio-cultural factors. It aims to reduce dependence on imports, enhance self-reliance, and position India as a formidable player on the global defense stage while contributing to economic growth and national pride.

Government Initiatives

The Indian government has taken several initiatives to promote indigenization and self-reliance in the defense sector. These initiatives are aimed at reducing dependence on foreign imports and encouraging the development of indigenous defense capabilities.
Some of the key government initiatives include:

• Defence Procurement Policy (DPP):
  • DPP 2016 introduced the category "Buy (Indian-IDDM)" (Indigenously Designed, Developed, and Manufactured) as the most preferred way of acquiring defense goods.
  • It allows the Defense Acquisition Council to fast-track the acquisition of weapons.
• E-Biz Portal:
  • The process of applying for an Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) has been made online through the eBiz portal.
  • The restriction on annual capacity in the industrial license for the defense sector has been removed.
• Outsourcing and Vendor Development Guidelines:
  • These guidelines are aimed at promoting the participation of the private sector, especially Small Manufacturing Enterprises (SMEs), in defense manufacturing.
  • DPSUs (Defense Public Sector Undertakings) and OFB (Ordnance Factory Board) are mandated to have outsourcing and vendor development plans to increase participation from the private sector.
• Uniform Custom Duty:
  • To create a level playing field between the Indian private sector and the public sector, both are subjected to the same excise and custom duty levies.
• Foreign Direct Investment (FDI) Policy:
  • Composite foreign investment of up to 49% is allowed through the Government route, and beyond 49% with the approval of the Cabinet Committee on Security (CCS) on a case-to-case basis.
  • Restrictions on single largest Indian shareholders and Foreign Institutional Investors (FII) have been removed to facilitate investment in the sector.
• Preference to Indian Industry:
  • Preference is given to 'Buy (Indian),' 'Buy & Make (Indian),' and 'Make' categories of acquisition over the 'Buy (Global)' category.
  • This prioritizes Indian industry in procurement processes.
  • These government initiatives are part of a broader strategy to enhance India's defense capabilities, reduce import dependency, boost indigenous manufacturing, and promote self-reliance in the defense sector.

Present Scenario

The present scenario in India's defense indigenization efforts showcases a mix of achievements and challenges. Some notable developments and projects in the Indian defense sector include:

• INS Vikrant (IAC-1):
  • India's first indigenous aircraft carrier, INS Vikrant, is under construction.
  • Sea trials were expected to commence in 2020, indicating progress in shipbuilding capabilities.
• Tejas Aircraft:
  • The Tejas aircraft program has faced challenges, particularly in developing its indigenous Kaveri engine.
  • Restricted access to high-end defense technology from certain countries has posed obstacles.
• Project 75 Submarines:
  • Project 75 (India) is a significant submarine program aimed at building advanced stealth submarines.
  • Collaboration with countries like France, Germany, Russia, Sweden, Spain, and Japan is part of this initiative.
• Dhanush Artillery Gun:
  • India has developed the Dhanush long-range artillery gun, often referred to as the "desi Bofors."
  • It has a substantial indigenous component and a strike range of 38 kilometers.
• Arihant Nuclear Submarine:
  • The Arihant, India's first indigenous nuclear submarine, was developed in collaboration with BARC and DRDO.
  • Challenges related to its fuel inventory and need for further improvement have been noted.
• AGNI V and Other Missiles:
  • AGNI V, along with other missile systems like Dhanush, Nirbhaya, Prithvi, and Akash, has contributed to India's missile capabilities.
  • AGNI V conferred intercontinental ballistic missile (ICBM) status to India.
• Pinaka Multi Barrel Rocket Launcher:
  • The Pinaka Multi Barrel Rocket Launcher, developed by the Armament Research Development Establishment, is a precision system with near-zero error probability.
• BRAHMOS Supersonic Cruise Missile:
  • The BRAHMOS missile is a successful joint venture between India and the Russian Federation.
  • India has a majority stake in the project, highlighting collaboration and indigenous contributions.
• Arjun Tank:
  • The Arjun Tank is a third-generation main battle tank developed by DRDO.
  • Ongoing efforts are focused on using composites to reduce its weight.
  • While India has made significant progress in several defense projects, challenges related to technology access, resource allocation, and project timelines remain. The drive toward indigenization in the defense sector is crucial for national security, fiscal management, and technological self-reliance.

Challenges

• Institutional Capacity: There is a lack of institutional capacity and capability to effectively implement policies aimed at defense indigenization.
• Dispute Resolution: Establishing a permanent arbitration committee to settle disputes related to defense procurement can expedite decision-making and reduce delays.
• Infrastructure Deficit: India's infrastructural deficit increases logistics costs, reducing cost competitiveness and efficiency in defense manufacturing.
• Land Acquisition: Land acquisition issues can hinder the entry of new players into the defense manufacturing sector.
• Offset Requirements: The offset requirements under the Defense Procurement Procedure (DPP) may not be effectively contributing to the goal of indigenization.

Way Forward

• Permanent Arbitration Cell: Set up a permanent arbitration cell to handle objections and disputes, providing a mechanism for expeditious resolution.
• Private Sector Boost: Encourage greater participation of the private sector, which can bring in efficient technology and human capital for modernizing indigenous defense industries.
• Big Ticket Contracts: Allocate significant contracts to the private sector to build their confidence and reduce the trust deficit between private and government sectors.
• Level Playing Field: Ensure a level playing field for the private industry, Defense Research and Development Organization (DRDO), Defense Public Sector Undertakings (DPSUs), and Ordnance Factory Board (OFB).
• Export Capability: Prioritize the deployment of weapon systems with the armed forces before aiming for export capability.
• Technology Development: Focus on developing indigenous capabilities in areas like software, artificial intelligence, and cybersecurity, including the production of microelectronics.
• Financial and Administrative Autonomy: Provide DRDO with greater financial and administrative autonomy to enhance its confidence and authority.
• Training and Tenure: Train and provide longer tenures to staff at the Department of Defense Production to ensure continuity and expertise.
• In-House Design: Promote in-house design capabilities among the armed services, similar to the Naval Design Bureau, which has shown progress in indigenization efforts.
• Supply Chain Development: Develop a robust supply chain to optimize costs and involve Indian Small and Medium-sized Enterprises (SMEs) in global supply chains.