Indigenization-Defence Production – UPSC GS3

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Facts:
  • As per Stockholm International Peace Research Institute, India was the second-largest importer between 2014 and 2019. It imported weapons worth US$ 16.75 billion during this period.
  • In 1995, committee under APJ Abdul Kalam had recommended that India should improve its indigenization content from 30% to 70% by 2005.  But self-reliance in defence production still estimated to be less than 35%.
  • About 90% of domestic defence manufacturing is currently done by public sector (9DPSU + 39 Ordinance Factories)
  • Government’s target is to reach a turnover of USD 25 billion by 2025 through indigenously manufactured defence products
  • Out of Rs 1.35 lakh crore allocated for capital acquisition for defence in this year’s budget, the government has reserved more than 60% for domestic procurement.
Positive Indigenisation List:
  • The Defence Ministry has notified the second negative import list of 108 items.
  • These items can now only be purchased from indigenous sources as per Defence Acquisition Procedure (DAP) 2020.
  • Total items in on the list are now 209.
  • Positive indigenisation list essentially means that the Armed Forces (Army, Navy, and Air Force) will only procure all of these 209 items from domestic manufacturers.
  • The manufacturers could be private sector players or defense Public Sector Undertakings(DPSUs).
Initiatives Taken to Boost Domestic Production of Defence Equipment:
  • Increased Capital Acquisition Budget (CAB) for Domestic Sector:
    • The Ministry of Defence has decided to earmark around 64% of its modernisation funds under the capital acquisition budget for 2021-22, a sum of Rs 70,221 crore, for purchases from the domestic sector.
    • For FY 2020-21, the capital budget allocation for domestic vendors was made at 58%, an amount of Rs. 52,000 crore.
  • Defence Industrial Corridors:
    • India has inaugurated two defence industrial corridors, one in Tamil Nadu and the other in Uttar Pradesh to boost the flagship “Make in India” programme that in turn would attract investment as well as encourage employment generation.
  • FDI Limit:
    • The Central government has increased the Foreign Direct Investment (FDI) limit in the defence sector from 49 to 74% under automatic route and beyond 74% through the government route.
  • Corporatization of the Ordnance Factory Boards:
    • This was announced for better management, so that they can be listed on the stock market and people can buy their shares.
  • Defence India Startup Challenge:
    • DISC aims at supporting Startups/MSMEs/Innovators to create prototypes and/or commercialize products/solutions in the area of National Defence and Security.
    • It has been launched by the Ministry of Defence in partnership with Atal Innovation Mission.
  • SRIJAN Portal:
    • It is a one stop shop online portal that provides access to the vendors to take up items for indigenization.
Critically examine India’s achievement in the indigenization in the production of defence products. (200 Words)
India is among world largest importers, this fact clearly shows that we lack in meeting demand of our defence forces. Our indigenous efforts have shown results but there is a lot of cost escalation and breach of time-limit one after another. This is evident from the facts:
  1. Tejas aircraft had taken more than 2 decades and 20,000 crore rupees. DRDO is not able to develop its indigenous Kaveri engine due to restricted access to high-end defence technology by countries such as USA, JAPAN etc.
  2. Arjun Tank project was sanctioned in late 1970s, it was rolled out for trial in few years back. Even after all these years it is said to be too heavy to use in actual war operations. Now DRDO is working on using composites to reduce the weight.
  3. First indigenous nuclear submarine (Arihant) was developed in association with BARC by DRDO. But it has insufficient fuel inventor because of which it cannot go for long deployment and further improvements are necessary.
  4. India has co-developed BrahMos missile with Russia. It is one of the best in its class.
  5. AGNI V has given India the status of ICBM holder country in 2013 though the project on integrated guided missile development was started in 1983. This along with Dhanush, Nirbhaya, Prithvi, Akash missiles has improved our deterrence.
  6. India’s first indigenous Aircraft carrier INS Vikrant is to be undocked for sea trials.
Future measures:
  1. Improve expenditure on higher education to improve the quality of scientists + Focus on Retention.
  2. Improve public R&D expenditure in defence sector and encouraging private players to contribute.
  3. Encouraging private and foreign investment in defence sector. Pruning of license requirements for 50% of the products on the list is a welcome step. DPP-2020 has already introduced the policy of parity between DPSEs and private players.
  4. Transfer of Technology (ToT) is the key here, foreign players are not willing to transfer high-end technologies, and creative incentives are needed to put in place for this purpose
  5. Providing guarantee of purchase is important for motivating this sector. A comprehensive defence production policy is needed that can clarify the important issues.

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