[Answered] Indigenising defence capabilities can help India both economically and strategically. Examine.

India’s defence budget is large and is growing very fast. Currently, the country allocates about 1.8% of its GDP to defence spending and imports about 70% of defence equipment. However, the country remains heavily reliant on defence imports, while its own exports are extremely meagre. An indigenous defence industry is vital for India given its security environment and strategic objectives.

Need and significance of indigenising defence capabilities:

1. Increasing demand: Due to the rising security threats, India’s defence requirements are likely to increase in the future. Thus, making indigenous development of modern defence hardware and technology a top priority for the government is important. With China and Pakistan as adversaries, there is a need to keep our armed forces modernised.
2. Strategic significance: Dependence on other countries for defence products, jeopardise India’s abilities to negotiate. A successful defence industry provides strategic leverage with other countries, including as a potential supplier to neighbours who may otherwise turn to competitors.
3. Largest importer: India is the largest arms importer in the world and spends annually on an average about $3.6 billion, which is more than the combined imports of both Pakistan and China. Thus it is important to indigenise the defence production, due to reduce high expenditure on defence equipment from outside. The Abdul Kalam Committee had recommended redressing India’s import-export ratio.
4. Economic growth: Defence sector has the potential to become an engine of economy and drive double digit growth in leading India to $5 trillion economy. Furthermore, with increase in defence exports, it would reduce the costs of defence acquisitions and can help subsidise a country’s defence budget. In Israel’s case, exports finance the country’s defence research and development (R&D) to a considerable degree.
5. Employment: As per government estimates, a reduction in 20-25% in defence related imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India. Defence industry is one of the 25 identified sectors under the Make in India programme, and is also part of the 10 ‘Champion Sectors’ that will generate significant employment opportunities.

Way forward:

1. Predictable Requirements: The armed services must take primary responsibility for articulating their short, medium, and long-term requirements for equipment, taking into consideration technological quality, costs, India’s industrial capabilities, and export potential. The Sisodia Committee had recommended involving industry in the acquisition process, including in setting qualitative requirements.
2. Neutrality: In a bid to make India’s defence public sector more competitive, the Defence Ministry must ensure that the acquisitions process is neutral for the public and private sector. A level playing field between the Indian public and private sectors will accelerate the process of indigenisation by increasing competition.
3. Partnering for success: Co-development and co-manufacturing is the way forward to achieve the vision of turning India into a global high value manufacturing destination. Indian industry must be encouraged to adopt best practices for global quality standards in their manufacturing processes to lead to the creation of a gold standard supply chain and defence manufacturing ecosystem in India.
4. A skilled talent pool: To be ready for the opportunities of the future, the industry needs to build and train talent to address the growing needs of the market. In addition, the academia and industry needs to forge partnerships to encourage research and technological advancements and create a talent pool that is industry ready.
5. Robust supply chain: A strong supply chain is critical for a defence manufacturer looking to optimize costs. With the government’s offset policies, procurement policies and regulatory incentives spurring the growth of a domestic defence industry, the SMEs need to play a more active role in developing a robust supply chain.
6. Infrastructure development: Lack of adequate infrastructure drives India’s logistics costs upwards thus reducing the country’s cost competitiveness and efficiency. While the government is investing in this area the pace of development needs to pick up considerably and public-private participation can go a long way in hastening this process.

Thus the indigenisation of defence industry is a necessary and worthwhile national security objective, particularly for a large country like India with an expanding economy, a wide variety of security challenges, and growing international obligations. Efforts should be made to ensure predictable long-term requirements and create a more level playing field between the public and private sectors.