Military Manufacturing: Prioritising Make in India

India’s journey towards self-reliance in defence manufacturing has gained significant momentum through a series of proactive policy initiatives and reforms. These strategic measures, aimed at promoting indigenous design, development, and production of defence equipment, have paved the way for reduced dependence on imports and fostered a thriving ecosystem for defence production. The sector is closely linked to India’s economic and strategic ambitions and forms a vital aspect of the government’s ‘Make in India’ push.

This was highlighted at the Defence Dialogue, organised by The Economic Times, in partnership with STRIVE. In accordance with the AatmaNirbhar Bharat initiative, the Government of India has accorded top priority to domestic procurement under the Defence Acquisition Procedure (DAP)-2020. The document, which lays down the policy and procedure for arms procurement, lays strong emphasis on sourcing capital items from domestic manufacturers.

To curtail imports and encourage domestic manufacturing, the Narandra Modi-led BJP government has issued four ‘Positive Indigenisation Lists’ comprising a total of 411 items for Services, and three such lists for Defence Public Sector Undertakings (DPSUs), encompassing 3,738 items. Import embargoes have been enforced for these items after specified timelines, promoting the local manufacturing ecosystem and technological self-sufficiency.

Streamlining the industrial licensing process and extending its validity period have simplified procedures for defence manufacturers, facilitating their engagement in the sector. Additionally, the liberalisation of the Foreign Direct Investment (FDI) policy has opened doors for increased investment, with 74 per cent FDI now permitted under the automatic route.

The government’s commitment to fostering innovation and collaboration is evident through initiatives like the Innovations for Defence Excellence (iDEX) scheme, Mission DefSpace, and the establishment of two defence industrial corridors in Uttar Pradesh and Tamil Nadu. These initiatives promote partnerships with startups, Micro, Small and Medium Enterprises (MSMEs), and the academia, driving research and development, technology infusion, and economic growth in the defence manufacturing sector.

Indigenous defence equipment procurement
The AatmaNirbhar Bharat initiative has yielded positive results, reducing reliance on foreign defence procurement and building its strategic and economic capabilities. The share of expenditure on defence procurement from foreign sources has decreased from 46 per cent in 2018-19 to 36.7 per cent as of December 2022. Weapons worth Rs 70,500 crore have been sold by Indian defence manufacturers, including the locally made BrahMos missiles, Shakti electronic warfare systems, and maritime utility helicopters for the Indian Navy. The Indian Air Force has also approved the integration of the Long-Range Stand-Off Weapon on SU-30 MKI aircraft. Additionally, the Indian Army is set to procure locally made 155mm/52 Calibre ATAGS and high-mobility and gun-t vehicles.

Declining defence imports: A shift towards AatmaNirbhar Bharat
India’s efforts to reduce dependence on defence imports have yielded substantial results, with a decline of 11 percent between 2013-17 and 2018-22. This reduction can be attributed to the implementation of a more streamlined procurement process, diversification of arms suppliers, and a concerted push to promote local designs. In FY22, India’s domestic procurement accounted for a significant 68 per cent.

India’s booming defence exports: Meeting global demand
As India strengthens its domestic defence manufacturing capabilities, it is emerging as a sought-after supplier of defence equipment worldwide. Defence exports have witnessed a remarkable eight-fold increase since 2016-17, from Rs 1,522 crore to Rs 13,800 crore. The central government has set a target of reaching total defence exports of Rs 35000 crore by 2024-25.

Notable export deals include the supply of 155-mm artillery guns and Teevra 40-mm guns to the Indonesian Navy, and a $250 million contract with Armenia for the supply of Pinaka missiles. India is also on its way to finalise BrahMos missile deals with Indonesia and the Philippines, following the successful $375 million agreement signed last year.

India’s efforts to become a defence manufacturing hub is linked to its ability to ink collaborations and partnerships with international defence giants. New Delhi is involved in the manufacturing of aero-structures for Boeing’s AH-64 Apache helicopters and has secured a Rs 21,935 crore deal with Airbus Defence and Space to produce C-295 medium-lift transport aircraft.

As the Government of India prioritises self-reliance in defence manufacturing, several reforms have been initiated for improving Ease Of Doing Business (EODB) and providing a more predictable policy framework. Indigenous defence production, besides fostering economic growth and creating large scale employment, will also help New Delhi mobilise its geo-economic ambitions and become the world’s third largest economy.