Indigenisation of Defence Sector

Indigenization of the defence sector in India refers to the nation’s initiatives to foster separation and minimize dependence on overseas vendors for defence technology and equipment.

In order to improve national security, lower import costs, and promote domestic industrial growth, it is intended to develop and produce defence infrastructure, ammunition, and supplies within India.

Indigenisation of Defence Sector: Statistics

• In the last three years, from 2018–19 to 2020–21, the government’s initiatives have lowered the expenditure on defence purchase from foreign sources from 46% to 36%, therefore reducing the import load.
• Additionally, over the past two years—2019–2020 and 2020–21—the Value of Production of Public and Private Sector Defence Companies has increased from Rs. 79,071 crore to Rs. 84,643 crore.
• According to India Brand Equity Foundation (IBEF), till October 2022, in total 595 industrial Licenses were issued to 366 companies operating in the defence sector.
• Defence Sector of India has grown by 334% in the last 5 years and is now exporting to 75+ countries with the help of collaborative efforts.
• India has the World’s third- largest defence expenditure after China and US and expects to export equipment worth US$ 15 Billion by 2026.
• As per Union Budget 2022-2023, 25% of the defence Budget has been embarked for private entities and start-ups to pave the way for new innovation in the defence technology.

Indigenisation of Defence Sector: Initiatives

• Make in India Policy:
  • Launched in 2014, “Make in India” policy, aims to support domestic production, R&D, and technological advancement in the realm of defence.
• Atmanirbhar Bharat Abhiyan:
  • The Self-Reliant India Campaign, which was introduced in 2020, places a strong emphasis on self-reliance in all spheres, including defence.
  • To minimise  reliance on foreign defence imports, it promotes indigenisation of defence industry, research and development, and innovation.
• IGMDP:
  • In 1983, When the government approved the Integrated Guided Missile Development Programme (IGMDP) to create five missile systems, it marked an important milestone in defence indigenization.
  • Prithvi (from surface to surface Akash(Air-to-Surface) Trishul (Prithvi’s equivalent in the navy) Nag (Anti-tank) Agni (1,2,3,4,5) is one of several ballistic missiles with various ranges.
• Defence Procurement Policy:
  • In accordance with the Dhirendra Singh committee’s recommendations, the Defence Procurement Procedure 2016 (which replaced the DPP 2013) added the additional category “Buy (Indian-IDDM)” — Indigenously Designed, Developed, and Manufactured — as the most preferred process for acquiring defence goods.
  • A “fast-track” acquisition process for weapons was previously exclusively available to the military forces, but DPP now permits the Defence Acquisition Council to use it.
• Outsourcing and Vendor Development Guidelines:
  • For DPSUs (defence public sector undertakings) and OFB (ordnance factory board) to encourage private sector engagement, especially SMEs (small manufacturing businesses) for defence production.
  • According to the guidelines that each DPSU and OFB must have a short- and long-term vendor growth plan in order to gradually boost outsourcing from the private sector, especially SMEs. The standards also cover vendor creation for import replacement.
• FDI policy:
  • It states that up to 49% of a company’s total foreign investment may be made through the government route (FIPB), and any amount above 49% requires the Cabinet Committee on Security’s (CCS) individual case-by-case clearance.
  • To ease investment in the industry, restrictions including the requirement that the single largest Indian shareholder hold at least 51% of the shares and the whole ban on Foreign Institutional Investors (FII) have been lifted.
• SRIJAN:
  • Launched in 2020. in an effort to encourage industrial indigenization, the Ministry of Defence has also developed an SRIJAN portal.
  • 19509 defence products that were previously imported have been submitted to the site for indigenization as of 2023.
  • The Indian military industry has so far expressed interest in indigenizing 4006 of them.

Indigenisation of Defence Sector: Challenges

• Lack of institutional competence:
  • The development and manufacture of cutting-edge defence systems nationally requires an extensive amount of professional knowledge and skills.
  • Implementing indigenization strategies can be challenging if the institutions involved in defence manufacturing lack the essential expertise, such as scientific and technological expertise or trained employees.
• Planning for defence is inadequate:
  • Effective indigenization of the defence industry requires extensive planning to identify the prerequisites, create goals, allocate resources, and determine plans.
  • Lack of effective planning can result in inefficiencies, delays, and the failure to accomplish the anticipated results. Institutional shortcomings prevent timely policymaking.
• Lack of Logistical support:
  • Defence indigenization frequently entails intricate supply chains and logistical demands.
  • The timely manufacturing and delivery of defence equipment might be hampered by a lack of suitable infrastructure, transportation options, or trustworthy supply chains, which can result in delays and price overruns.
• Lack of a forum for conflict resolution:
  • Multiple parties may be involved in indigenization policies, including defence organisations, governmental organisations, private businesses, and research institutions.
  • Disagreements or conflicts among various stakeholders may develop in the absence of a designated forum or platform for decision-making, delaying and impeding development.
• Lack of infrastructure for expanding output:
  • It takes significant investments in facilities, testing labs, and specialised equipment to build a strong defence manufacturing infrastructure.
  • The scope and pace of domestic defence manufacturing may be hampered by inadequate infrastructure, particularly in the private sector as a whole.

Indigenisation of Defence Sector:Way forward

• Strategic planning:
  • Create a detailed, long-term plan for defence indigenization that defines specific goals, deadlines, and action steps.
  • This strategy should be reviewed on a regular basis and take into account things like resource allocation, national security concerns, and technological changes.
• Infrastructure development:
  • To aid indigenization initiatives, make investments in the creation of logistics facilities, such as transit systems, laboratories, and manufacturing centres.
  • Defence system production, delivery, and maintenance will all be efficient.
• Boosting Private Sector:
  • In order to modernise the inventive defence industry, a boost to the private sector is required since it can provide the efficient and effective technology and human resources needed.
  • To increase the private sector’s confidence and close the trust gap between the private and public sectors, large contracts must be given to them.
  • Make that the private sector, DRDO, DPSUs, and OFB are all treated equally.
• In-house Development:
  • The Navy has advanced successfully on the path of indigenization primarily because of the in-house design capabilities, the Naval Design Bureau.
  • In-house design competence should be enhanced among the three services.
  • So, instead of relying on the DRDO to design and create the entire ship, they can outsource the development of the ship’s individual subsystems.
• Technological Advancement:
  • Chip industry should be developed and produced domestically using the software industry and technologies like artificial intelligence and cyber security.
  • By developing and manufacturing their own cutting-edge defence equipment, nations can lessen their dependency on foreign suppliers as a result of technological innovation.
  • It improves national security by guaranteeing that cutting-edge defence technology are accessible and available even during periods of geopolitical unpredictability or weapons embargos.