Defence Manufacturing Efforts

In News

• Recently,  the Ministry of Defence (MoD)signed contracts worth ?32,000 crore for various defence systems.

About

• On the eve of the financial year closing, Ministry of Defence has signed the following agreements
  • It signed agreements with Goa Shipyard Ltd (GSL) and Garden Reach Shipbuilders and Engineers (GRSE) for acquisition of 11 next-generation offshore patrol vessels.
  • It has plans to procure  six next generation missile vessels (NGMV)from Cochin Shipyard Limited (CSL) at a cost of ?9,805 crore
  • It signed a contract with Bharat Electronics Limited (BEL) for procuring 13 indigenously designed and developed Gun Fire Control Systems(Lynx-U2 Fire Control Systems) for Indian Navy warships at a cost of ?1,700 crore.
    • it has also got a contract for  improved weapon locating radars ‘Swathi’ (Plains) at a cost of over ?990 crore and contract for procurement of improved Akash Weapon System (AWS) for 3rd & 4th Regiments of Army Air Defence, comprising live missiles and launchers with upgrades, ground support equipment
  • The Ministry also inked a deal with BrahMos Aerospace Private Limited (BAPL) for procurement of next generation maritime mobile coastal batteries (long range) and BrahMos missiles at an approximate cost of over ?1,700 crore

Indigenisation of Indian Defence Sector:

• Current Status: 
  • India’s defence manufacturing sector has been witnessing a CAGR of 3.9% between 2016 and 2020. The Government of India has set the defence production target at US$ 25 billion by 2025 (including US$ 5 billion from exports by 2025)
  • As per recent data of Stockholm International Peace Research Institute (SIPRI), India is the second largest arms importer just behind Saudi Arabia.
• Need:
  • Self-defence: The presence of hostile neighbours like China and Pakistan makes it improbable for India to boost its self-defence and preparedness.
  • Strategic advantage: Self-reliance will make India’s geopolitical stance strategically stronger as a net security provider.
  • Technological advancement: Advancement in the defence technology sector will automatically boost other industries hence catapulting the economy further ahead.
  • Economic drain: India spends around 3% of GDP on defence and 60% of that is spent on imports. This leads to an immense economic drain.
  • Employment: Defence manufacturing will need the support of numerous other industries which generate employment opportunities.
• Challenges :
  • Narrow Private Participation: Private sector participation in the defence sector is constrained by the lack of a conducive financial framework, that means our defence production is unable to benefit from modern design, innovation, and product development.
  • Lack of Critical Technology: Lack of design capability, inadequate R&D investment, inability to manufacture major subsystems and components hamper indigenous manufacturing.
  • Lack of Coordination Between Stakeholders: India’s defence manufacturing capability is hindered by overlapping jurisdictions between the Ministry of Defence and the Ministry of Industrial Promotion.
  • Bureaucratic delay and licensing issues:there is still no ease of doing business in defence industry.: Investment in the defence sector is subject to compliance with the licensing requirements stipulated by the Department of Industrial Policy and Promotion (DIPP)
• Initiatives :
  • Innovations for Defense Excellence (iDEX):  It is an initiative by the Government of India to modernise the nation’s Defense industry. It will empower a culture of technology co-creation and co-innovation in the sector and boost innovation among the start-ups and encourage them to be a part of the ecosystem.
  • Defence Corridors: The UP Industrial Defense corridor and Tamil Nadu Defense corridor would evolve as the  hub for private industries, subcontractors, skilled manpower and R&D for manufacturing  military systems and technologies.
  • Budget 2022-23 Allocations : It has set aside nearly 70% of the capital allocation for the domestic industry. 25% of the defense R&D budget has been earmarked for the private sector, including the industry, start-ups and academia. 
  • A Special Purpose Vehicle model (SPV) has also been arranged in the budget. It will “establish the role of the private industry as a partner beyond just a vendor or supplier”.
  • Positive Indigenization List: The 3rd positive indigenisation list of sub-system has been notified by the Department of Defence Production, Ministry of Defense in December 2021.
  • Defence Production and Export Promotion Policy, 2020: The Government formulated the policy to provide impetus to self-reliance in defence manufacturing under the ‘Aatmanirbhar Bharat’ scheme. The Ministry aims to achieve a turnover of Rs. 1 lakh 75 thousand crore (US$ 25 billion), including an export of Rs. 35 thousand crore (US$ 5 billion) in the aerospace and defence goods and services by 2025.

Source: BL