It was less than a month ago that we published an article about how India needed to build its own desi military-industrial complex. In the last 24 hours a major development has happened in this respect. The first was the publishing of a Negative Import List by the Ministry of Defence that included no less than 101 items including everything from sniper rifles to conventional submarines. The move is expected to give local players access to defence contracts worth approximately 4 Lakh Crores in the next 6 to 7 years.
The most important factor here is the gradual implementation of the list of items from 2020 till 2025. This will give Indian manufacturers enough time to design, develop and world-class military equipment for the tri-services. The announcement is a welcome step in the direction of Atmanirbhar Bharat, and was the result of multiple rounds of consultations with relevant industry players.
India as a defence hub
In addition to the list of suppliers that include large government backed organisations like HAL, BEL, etc. the extended timeline of the embargo will also give a level playing field for smaller and newer players. MoD has also bifurcated its budget for local and international procurement. No less than INR 52,000 Crores have been earmarked for domestic procurement. The announcement is in line with the Government of India’s desire to achieve self-reliance in all strategically important areas including defence. On 9th August, Defence Minister Rajnath Singh had tweeted that “A global epidemic like Corona has told the whole world that countries that will not be self-sufficient will not be able to protect their sovereignty in the true sense.“
But, this is just one side of the story. On ground these goals will be achieved using the strategy document that the Department of Defence Production has prepared. The document details out the various ways in which MoD intends to boost investment in R&D and defence production at the same time. While admitting that the domestic defence industry would have limited scope for investment in R&D and production if it relies only on the domestic demand, the document also talks about how the thrust would be on indigenous production and exploring possibilities of exports to other nations.
A more strategic approach
The strategy document gives us insights into the various ways in which GoI is accelerating the goal of achieving self-reliance in defence. An encouraging sign is how it will be leveraging Indian Embassies/ Missions abroad in making targeted efforts for promoting export of Indian defence products. It has also highlighted the need to develop SMEs and Indian R&D institutions with a focus on exports to achieve all these goals.
The strategy document is backed by the Defence Production & Export Promotion Policy (DPEPP) 2020, which encompasses a slew of measures to attain the goal of making India an upcoming defence manufacturing hub. The Policy also notes that in the private sector, many engineering majors have diversified and joined the Defence sector. More than 460 licenses have already been issued to private companies for production of defence equipment. The defence industry also has a strong base of over 8000 MSMEs that provide strength to the defence supply chain. India’s private sector can make use of these positive developments to develop export quality equipment that will boost the capabilities of the Indian Armed Forces while also making inroads into overseas defence markets.