Why in News:

• Given its successive abstentions during votes on Ukraine in the UN Security Council and elsewhere, India has attracted criticism citing “realpolitik” by critics.
• Russia provides 60-70 percent of India’s military weaponry. Any disruption in supplies might have a significant impact on our defence position in relation to the China-Pakistan axis. It has called into question India’s “strategic autonomy.”

Background

• India had the dubious distinction of being the one of the world’s largest arms importer, accounting for about 12% of global arms imports.
• This external dependence for weapons, spares and, in some cases, even ammunition creates vulnerabilities during military crises.
• The SIPRI report found that India’s arms imports came down by a third between 2011-2015 and 2016-2020, at a time when the government has been trying to reduce the import dependence when it comes to defence platforms and weapons.
• However, India remained the second highest importer, only behind Saudi Arabia. The top five global arms exporters were the US, Russia, France, Germany and China in 2016-2020.
• In the study, SIPRI stated, “Arms imports by India decreased by 33 percent between 2011–15 and 2016–20. Russia was the most affected supplier, although India’s imports of US arms also fell, by 46 per cent.”
• The report attributed the fall not to the government’s push to make India self-reliant in defence manufacturing, but to factors including reducing the dependence on Russian arms, and the complex procurement procedure.

Other aspects of indigenization

• Defence manufacturing is one of the few industries that may provide a wide range of job opportunities. According to official projections, a 20-25 percent reduction in imports will result in the creation of 100,000 to 120,000 extra highly skilled employment in India.
• Aside from that, it will result in large-scale innovation, a slew of spin-off sectors and start-ups, and so on.
• According to SIPRI data, India is the 23rd largest exporter of defence goods. Given that India spent $71.1 billion on defence in 2019, this is a significant underperformance. India can export defence technology and equipment made in the country to its neighbours. R&D in the defence industry, like space and nuclear research, will place a greater emphasis on both the civil and military economies.
• According to SIPRI, India’s military spending accounted for 2.4 percent of GDP in 2019. It was larger than the sum of health and research spending (1.5 percent of GDP) (0.7 percent of GDP). The government must accelerate indigenization in the defence industry since it has several benefits, including reduced fiscal deficits, improved manufacturing, and so on.

Issues associated with Russian Imports

• Safeguarding the source of 60-70 percent of its military hardware constitutes a prime national interest for India.
• Any interruption in the supply of Russian arms or spares could have a devastating impact on our defence posture vis-à-vis the China-Pak axis.
• Russia’s military-industrial complex, has been struggling against inefficiency, poor quality control and deficient customer support.

The answers to India’s dilemma lie in two imperatives. They are: The “de-Russification of the armed forces” and the genuine “indigenisation of India’s defence technological and industrial base (DTIB)”

Measures taken to reduce imports

• • The decision to notify a list of weapons(negative import list) systems for sourcing entirely from Indian manufacturers, the promise to progressively expand this list and a separate Budget provision for domestic capital procurement.
  • The liberalisation of foreign direct investment in defence manufacturing, raising the limit under the automatic route to 74%, should open the door to more joint ventures of foreign and Indian companies for defence manufacturing in India.

• Mission Raksha Gyan Shakti

• • • The Ministry of Defence launched it in 2018 with the goal of increasing Intellectual Property (IP) in the Defense Production Ecosystem.

• India’s Defence Technology Industrial Base (DTIB)

• • Chief of Defence Staff (CDS) has been tasked with promoting indigenous equipment in the armed force
  • Defence India Startup Challenge– Read at https://officerspulse.com/defence-india-startup-challenge/
  • Draft Defence Production and Export Promotion Policy 2020– Read at https://officerspulse.com/draft-defence-production-and-export-promotion-policy-2020/

• Defence Procurement Procedures (DPP) 2020

• • • It allows for the publication of a list of weapons or platforms that cannot be imported
    • It focuses on FDI in defence production and indigenization of manufacturing costs.
    • It also introduces numerous new concepts, including the need for artificial intelligence in platforms and systems, the use of indigenous software in defence equipment, and ‘innovation’ by start-ups and MSMEs (Micro, Small and Medium Enterprises) as a new category of defence purchase.
    • Buy (Indian – Indigenously Designed, Developed, and Manufactured), Buy (Indian), Buy and Make (Indian), Buy (Global – Manufacture in India), and Buy (Global – Manufacture in India) (Global).
    • It raises the Indigenous Content (IC) requirement for all projects from 40 to 50 percent previously, depending on the category, to 50 to 60 percent now.
    • Foreign vendors can receive 30% IC from Indian enterprises only if they purchase through Buy (Global).
  • Defence Industrial Corridors– Read at https://officerspulse.com/defence-industrial-corridors/

• SRIJAN Portal

• • The Department of Defence Production has created an indigenization webpage, srijandefence.gov.in, titled ‘opportunities for Make in India’ in Defense, that would provide information on things that can be indigenized by the private sector.
  • DPSUs/OFBs/SHQs can use this portal to exhibit things that they have been importing or will be importing that the Indian industry can design, develop, and produce according to their capabilities or through joint ventures with OEMs.
• Corporatization of the Ordnance Factory Boards– Read at https://officerspulse.com/ordnance-factory-board-corporatisation/
• Innovations for Defence Excellence (iDEX)– Read at https://officerspulse.com/innovations-for-defence-excellence-idex-initiative/

Challenges faced

• In-house manufacturing is hampered by a lack of critical technologies, poor design skills in vital technologies, insufficient R&D expenditure, and the inability to produce major subsystems and components. The interaction between R&D, production agencies (public or commercial), and end-users is severely strained.
• The Indian government has authorised over 200 defence procurement bids with a transfer of technology provision worth roughly Rs 4 trillion in the last five years, but the majority are still in the early stages of processing causing inordinate delays.
• India’s defence manufacturing capabilities are hindered by the Ministry of Defence and Ministry of Industrial Promotion’s overlapping authority.
• In addition, factors such as strict labour regulations, compliance burdens, and a lack of expertise impede the growth of indigenous defence production. As a result, India has been unable to attract FDI in the defence sector.
• India has four companies among the top 100 largest armaments makers in the world (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Bharat Dynamics Limited (BDL)). These four firms are all government-owned and account for the majority of domestic arms demand. Despite ‘Make in India,’ governments have a history of favouring Defense Public Sector Units (DPSUs) above the private sector.
• The establishment of a manufacturing base requires significant investment in both cash and technology, as well as a lengthy gestation time. It could take anywhere from  ten to even fifteen years for a factory to reach optimum levels of capacity utilisation, and by the time a unit begins production, there could be changes in the threat assessment/ strategy, resulting in a complete shift in priorities, or newer technologies could render products obsolete.

Areas where  Atmanirbhar Bharat has to focus on

• Vital sub-systems like engines, guns, missiles, radars, fire-control computers, gear-boxes and transmission are either imported or assembled under foreign licences.
• Many of the critical components are imported and spares continue to come from abroad.
• Attaining genuine “atmanirbharta” require selective identification of vital military technologies in which we are deficient and demands the initiation of well-funded, time-bound, mission-mode projects to develop (or acquire) the “know-how” as well as “know-why” of these technologies.
• The bureaucracy’s incomprehension of military technology has allowed the defence science establishment to have its way without an iota of accountability for missing time, cost or performance targets.

Why DRDO has not been able to reduce import

• DRDO is a demand-driven organisation. The organisation’s pace and overall direction can both get derailed if there is no overall cohesiveness and stability in the user requirement.
• An unfair equivalence is established between DRDO and the US Defence Advanced Research Projects Agency (DARPA). DARPA exclusively works on ‘blue-sky’ foundational research projects, independent from any requirements of the US armed forces, while DRDO projects are user-defined. Even DARPA projects fail and the amounts are written off – it is a sort of venture capital carrying an element of risk of failures. Bureaucracy and rigid financial rules does not allow such risk-taking with public funds in the case of DRDO.
• DRDO is only one link in the entire chain of defence development and production. A number of projects successfully developed by DRDO till their validation have been hampered by less than satisfactory quality assurance in the production and the blame has been put on DRDO.
• Some technologies truly are difficult to develop and replicate, and require continuous investment over years without expectation of immediate results. The shortcut of reverse engineering is not available. Only when we turn every failure into learning and a stepping stone for future success will we be on the right path. Ex:  Kaveri engine is not an unmitigated failure as the dry thrust part of the engine has met the required specifications and can be used as a stepping stone for future work.
• DRDO has to embrace the private sector as a partner.. Even though the funding is not high, there have been successes with DRDO scientists mentoring MSMEs and startups.

The expanding ecosystem of R&D focussed on defence will add to the successes of DRDO that we see in a number of complex systems such as strategic systems, LCA, missiles, air defence systems, Radar.. The emphasis on Atmanirbhar Bharat together with growing size of R&D funds spent wisely will help achieve the vision of India as an emerging power on the global stage.

Way forward

• DPP 2020 should incorporate guidelines to promote forward-looking strategic partnerships between Indian and foreign companies, with a view to achieving indigenisation over a period of time for even sophisticated platforms. Cost evaluation has to evolve from mechanical application of the L1 (lowest financial bid) principle to prioritising indigenous content.
• Spares, ammunitions and subsystems must be manufactured in India with technology transfer
• Promotion of Defence Exports
• Role of DRDO must be revised
• Private players participation

Additional Information

1. India’s defence exports– https://officerspulse.com/indias-defence-exports/

References:

1. https://www.orfonline.org/research/defence-acquisition-procedure-2020-imperatives-for-further-reforms/
2. https://indianexpress.com/article/opinion/columns/an-atmanirbhar-india-can-look-the-world-in-the-eye-russia-ukraine-nato-7828628/