Defence Industry

Make in India in Defence Production: Challenges & Opportunities
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Issue Vol. 31.1 Jan-Mar 2016 | Date : 25 Apr , 2016

Collaboration and cooperation between the private sector and Public Sector Defence Units may create synergy in defence production. R&D needs to be taken to private firms and SMEs need to be encouraged to undertake the development and production of critical sub-assemblies through various policy supports. A boost in defence production in India will improve its defence preparedness, boost economy and provide employment apart from changing the technological landscape of India as it will also boost civil industries.

About 70 per cent of the capital acquisitions for equipping armed forces are met through imports. Therefore, one of the focussed areas for “Make in India” is defence industry that provides support to the national security in addition to creating employment.

Security is one of the most important matters of the state as security issues are closely linked with the legitimacy of the government. Though security encompasses many dimensions such as political including territorial security, economic security, cultural security and environmental security, defending the territorial integrity of the state is the prime responsibility of the government as most of the armed conflicts and wars have taken place for expansion and control over territories in order to enhance the tangible and intangible resources of state.

Accordingly, concerns for security of state necessitate defence preparedness by maintaining strong, adequate and effective armed forces at least to deter and counter perceived external threats. Defence preparedness requires acquisition of “means” for the fighting forces to match the capability of perceived adversaries in addition to will power, well trained armed forces, well planned strategies, information gathering, and soft power. The means include weapons, equipment and other supplies required for fighting forces during operation in war. Modern warfare is highly technology intensive so a major challenge before armed forces of any nation is the acquisition of weapons and equipment with adequately high technology matching to or better than that of the perceived adversaries.

Make in India in Defence Sector

The current NDA government led by Prime Minister Narendra Modi since May 2014, has accorded the highest priority to “Make in India” for boosting the economy and creating employment to its young population. Moreover, India is heavily dependent on imports to meet the defence acquisition requirements. About 70 per cent of the capital acquisitions for equipping armed forces are met through imports. Therefore, one of the focussed areas for “Make in India” is defence industry that provides support to the national security in addition to creating employment. Thus “Make in India” programme in defence sector is extremely relevant with the twin objectives of creating employment and bolstering defence preparedness in order to strengthen national security.

Despite their strength and hidden potential, state-owned defence manufacturing units and DPSU cannot do much towards the development of defence technologies…

The Government of India has provided adequate budgetary allocations in the past for acquisition of weapons, equipment and other supplies for armed forces but many a time, the same could not be fully utilised due to non-availability of adequate indigenous sources of supplies. Indigenous sources of supply of these weapons, equipment and supplies have been heavily dependent on the Defence Research and Development Organisation (DRDO) for design and development, and state owned production units and Defence Public Sector Undertakings (DPSU) for production. On account of poor performance of these entities due to a host of structural, operational and cultural problems, on account of exogenous as well as endogenous factors, the desired level of defence acquisition have not been met.

The private sector has not yet been able to make an appreciable presence in defence supplies especially in critical defence technologies. The Department of Defence Production (DDP) has a long acquisition process consisting of multiple steps starting with framing of Services Quality Requirements (SQR) at the Planning Directorate of each service, at the lowest level to the Defence Acquisition Council (DAC) at the highest level, and entire process of acquisition is very time consuming. In some cases, by the time delivery of weapons or equipment takes place, new sets of upgrades become a necessity.

Acquisition of critical weapons and equipment through imports sinks into a quagmire of corruption in many cases leading to delay or cancellation of the entire acquisition process. Moreover, due to global political constraints, wherever defence acquisitions through imports were made, in most of the cases, it was not contemporary world-class technology available. So, high priority on defence production in Make in India can boost development of indigenous defence industries in high end technologies that is essential for ensuring defence preparedness.

Concerns for security of state necessitate defence preparedness by maintaining strong, adequate and effective armed forces…

Defence production is also one of the priority areas for Make in India with a perspective to create additional employment as well as to make India self-reliant in defence production where about 70 per cent of capital acquisitions in weapon and equipment is through import. Despite high dependency on import for capital acquisitions in weapon and equipment, state-owned defence production units and DPSU are growing annually barely at an average rate varying from two to five per cent in terms of Value Of Production (VOP) on account of a number of endogenous and exogenous factors.

Indigenous Effort

High dependence on import and low growth rate of DPSU and state-owned defence production units make sense of nurturing defence industries in the private sector and bring Foreign Direct Investment (FDI) in defence industries for self-reliance in defence system. Self-reliance in defence production will prepare the nation better to meet the security challenges and to deter the perceived adversaries. Total global defence export business is estimated to the tune of $1.5 trillion. Therefore, it makes good sense to give a boost to defence production by the ‘Make in India’ programme as there are ample opportunities to meet national requirements and vie for a share in global export potential after meeting the national requirements.

It makes one to pause and think about how countries such as China and South Korea that were either on par or inferior to India in industrial and technological development till the 1970s, became exporter of defence items and India remained one of the biggest importers of the defence items in Asia. Definitely, the answer lies in technology acquisitions through Foreign Direct Investment (FDI) in civil as well as in defence technology coupled with Research and Development (R&D) pursued by these countries. Therefore, India also needs to boost its defence production taking lessons from China and South Korea; and should attract FDI in defence production as well as in civil sector as many civil sector technologies find usage in defence sector also.

Lack of clarity and transparency in identifying the main attributes of weapons and frequently changing of specifications retard the process of development of new weapons…

Despite their strength and hidden potential, state-owned defence manufacturing units and DPSU could not do much towards the development of defence technologies as it was not their mandate. Whatever little they do in R&D, is limited to incremental improvement in process improvement and component design that too after a rigorous process of consultations and approvals. The DRDO, which is responsible for the development of defence technologies, is constrained by its inefficiency in developing new products and systems. Most of the DRDO projects ranging from gas turbine engine Kaveri, Light Combat Aircraft Tejas to long-range Surface-to-Air Missile systems, are running years behind schedule with huge cost overruns. Even international peer group and experts also see lacklustre in India’s development of military technology.

Given below is the view of an international expert published in SIPRI especially about India’s missile development programme.

“Military research and development (R&D) in India is not progressing as rapidly or as far as its leaders had hoped and observers had predicted. The obstacles preventing India from developing a more advanced military technology base are primarily technical and economic, stemming from chronic problems with project management rather than any lack of scientific resources. Indian military R&D programmes have achieved some immediate goals but have not created the anticipated technological momentum that would allow them to move from limited import substitution to indigenous innovation.”

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

DC Srivastava

DC Srivastava, IOFS, Addl. General Manager, Vehicle Factory, Jabalpur.

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2 thoughts on “Make in India in Defence Production: Challenges & Opportunities

  1. An excellent expression by the author on a subject concerning to make in india in defence sector . We wish to see some more article in forthcoming issues of iDR to strengthen the defence preparedness by achieving the goal of indigenous weapons and other equipments for armed forces. In my openion our Ordnance Factories known as FOURTH ARM OF DEFENCE, having the infrastructure and core competence in manufacture of Arms and Ammunition can perform much better to achieve the goal.
    Regards & best complements. Rajendra Singh
    Retd. Asstt Director(OL)

  2. What beats me is the fact that despite doing so well in the space sector, why is it that we have been lacking in defence technology. Did we not design the HF 24… indication that we did have the capability in design and development….then why the drought for so many years…..we can design missiles….space vehicles…Mars missions…but we have not mastered the metallurgical science for an aero-engine. MSMEs have the capabilities of precision engineering and much more…..private sector has capabilities in all sectors…but is not moving ahead in the defence sector.
    Even today…. With many rules and policies having been amended…..the progress…the least to say…is tardy.

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