October 2022 Full PDF final

DELHI DIARY
DELHI DIARY
Streamlining of export regulation system;
Adopting a policy of engaging India's Diplomatic
footprint for export promotion;
Export financing via lines of credit;
Strategically adopting an offset policy for
indigenous defence production.
India's first aircraft carrier INS Vikrant
BrahMos supersonic cruise missile
The primary aim of the government
now is to build a robust domestic
supply chain taken care of by private
companies, small businesses and
start-ups engaged in manufacturing
of defence products. To promote
indigenisation, the Defence Ministry
has brought out two positive
indigenous lists. “With the first and
second lists, contracts worth $7.1
billion have been awarded to Indian
companies. We hope that over the
next five to seven years the indigenous
acquisition will provide $64.28
billion worth of orders for the industry”,
Defence Minister Rajnath
Singh was heard saying recently in a
gathering.
The stalwarts of the industry are
calling for new economic models
and processes that would help and
benefit India's defence export markets,
including fair and quick decisions
on contract awards and less
bureaucratic red tape to lessen the
cost of acquisition. It must be noted
that a steady flow of orders are
necessary to enable private entities
to grow and for this, a level playing
field is required. For the private
sector, which has the infrastructure
and capability, state-run companies
should not come in their path
of progress and growth, said the industry
association chiefs.
ment, ports and shipping, railways, tourism, hospitality
and wellness industries apart from indigenous defence
production. The key national objective of the ‘make in
India' programme is to achieve self-reliance, conserve
critical foreign exchange, develop export potential,
enhance technology and skill and use defence manufacturing
not only as an engine of national economic
growth but also to transform India into a true global
superpower.
Time is also a very important factor as most projects in
this sector are Greenfield in nature that require a long
gestation period. In this connection, a recent report by
Bloomberg quoting anonymous sources from the Defence
Ministry of India has said that the current policy
of self-reliance has left India vulnerable to persistent
threats from China and Pakistan. Due to an embargo
on defence imports it may leave India “critically short
of helicopters by 2026 and short of fighter jets by 2030,
leaving the Indian Air Force with less than 30 fighter
squadrons well below the required 42”. But the government
of India thinks otherwise.
The new policy on defence procurement “mandates between
30% and 60% of homemade components”. This
ambitious policy aims “to shift from being the world's
largest importer of defence equipment to meeting the
majority of its needs through domestic production”. India
is today in the lookout of suitable partners to start
joint ventures to manufacture specialist equipment,
engage in joint R&D in niche areas, and provision of
services and training in cyber security. India's current
limited skillsets for high-tech defence manufacturing
are likely to improve as domestic manufacturing boosts
in the coming days.
It may be recalled that India is the fifth largest military
spender in the world, with the second largest standing
army with 1.3 million active service personnel. Nearly
16% to 17% of the central government's annual budget
is allocated for defence, which is the highest of any sector.
Moreover, it is estimated that India would spend
around $250 billion on defence procurement in the
next 10-15 years. Sanjay Jaju, Additional Secretary in
the Department of Defence Production, said India exported
Rs 13,000 crore worth of defence equipment in
2021, which is a quantum jump of 54.1% than previous
year. A whopping 70% of this came from private enterprises
and 30% from public sector undertakings. Indian
defence products worth $1.76 billion were exported to
75 countries in the year, of which USA was the highest
importer apart from the Southeast Asia and Africa nations.
India has all these years met its defence requirements
through imports and it green-signalled domestic private
sector participation in defence manufacturing
only in the year 2001. While other countries with large
defence budgets like the UK import 32% of its requirements
and the US 9%, about 60% of India's defence
equipment requirements are met through imports.
Russia, USA and Israel are the top exporters of defence
equipment to India. Foreign and domestic think-tanks
taking interest in India's burgeoning defence requirements
have suggested a multidimensional strategy to
boost this sector. Some of these strategies include:
To put this in fast-track mode, the following steps have been implemented by the government:
1) Revised defence acquisition procedure 2020;
2) Announcement of two positive indigenisation lists comprising over 209 items;
3) Creating two dedicated defence corridors in Uttar Pradesh and Tamil Nadu;
4) Restructuring the offset policy to attract investment and ensure transfer of technology;
5) Announcing innovation of defence excellence (IDEX) scheme for MSME and startups;
6) FDI in defence increased to 74% through automatic route and 100% through government approval;
7) Licensing procedure necessary to set up defence production units simplified;
8) Implementation of public procurement (preference to make in India) order 2017;
9) Restructuring of the Ordnance Factory Board to seven new defence companies through an action
plan by MOD.
India would, however, as an exporter, have to tread a
careful path, as often exporting arms and ammunition
may result in discord and disharmony among friends,
just as it happened when USA decided to provide $450
million to Pakistan to upgrade and maintain its F16
fighter jets, to which India disapproved. Similarly, in
2021, when India sold a Kilo-class submarine INS Sindhuvir
to Myanmar, this action made Bangladesh unhappy.
However, India said that it was part of its continued
commitment to building capacities and self-reliance in
the neighbouring countries and its vision of SAGAR (Security
and Growth for All in the Region).
Colonel Balwan Singh Nagyal recently commented that
India, from a country where domestic defence production
had meant “assemblage under licence…self-sufficiency
in defence will be the single-most fundamental
of strategic independence.” Defence sector, being a very
critical area of the Indian economy, has the potential
for tremendous growth as it is backed by a large talented
pool of human resources and the modernisation
requirement of the Indian Armed forces. Proper policy
implementation, active public-private collaboration,
boosting indigenous design development and manufacturing
will enable to usher in a sustainable defence industrial
ecosystem, making the IMF projection of India
becoming the third largest national economy by 2027-
28, with only China and USA ahead, a reality.
Dr Debjyoti Chanda is currently Chairman,
Department of Mass Communication and
Videography, Rabindra Bharati University,
Kolkata, India. An author, development
communication specialist and news
anchor, he has also served the Indian
Information Service. He can be reached at
debjyotichanda1969@gmail.com
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