Syllabus Section: Science and Technology/ GS Paper III
A government bears ultimate responsibility for a country’s security. Its ability to equip its armed forces using its own industrial and technological capabilities is of great importance, A successful defence industry provides strategic leverage with other countries, including as a potential supplier to neighbors who may otherwise turn to competitors. Furthermore, defence exports reduce the costs of defence acquisitions and can help subsidise a country’s defence budget, hence the indigenization of a 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.
Indigenization means building systems or parts there off in the country which includes assembling knock down kits to building from scratch. All these have been part of an extended trial and error process. The services too have set up considerable a technology infrastructure.
Indigenization of defence technology is the capability of developing and producing any defence equipment within the country for the dual purpose of achieving self reliance and reducing the burden of imports. Self-reliance in defence manufacturing is one of the key objectives of Department of Defence Production
Need For Indigenization of Defence Technology
- Fiscal improvisation: Being the second largest arms importer in the world (after Saudi Arabia) lead to increase in the fiscal deficit as we procure 60% of its weapon systems from foreign markets. Indigenization will lower the deficit.
- Improved BOP– India can export its indigenous defence technology and equipment to the neighboring nations.
- Economic growth– It will boost of the GDP as well, as the reduced import bills will be replaced by indigenous production and other factors of production.
- Security Measures: Indigenization in defence is critical to national security also. It keeps intact the technological expertise.
- Strategic Independence– While formulating bilateral relation, defence equipment import dependency will no more affect the rational decisions. Self-sufficient and self-reliant defence industry will place India among the top global powers.
- Employment generation: 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.
- Societal and Psychological impact– Nationalism and Patriotism can increase with indigenous production of defence equipment, that in turn will not only boost the trust and confidence of the Indian forces but will also strengthen a sense of integrity and sovereignty in them.
- Defence Acquisition Procedure 2020- New DAP incorporates several measures to boost domestic Defence industry and Make in India; Procedures simplified to reduce time delays and enhance ease of doing business.
- New FDI Policy : Some new provisions like new category ‘Buy (Global – Manufacture in India)’ done to encourage foreign Original Equipment Manufacturer (OEMs) to setup ‘manufacturing / maintenance entities’ through its subsidiary in India while enabling requisite protections to domestic industry. FDI through automatic approval is increased from 49% to 74%.
- Preference to ‘Buy (Indian)’, ‘Buy & Make (Indian)’ & ‘Make’ categories of acquisition over ‘Buy (Global)’ category, thereby giving preference to Indian industry in procurement.
- Industrial Corridors- The government has inaugurated two defence industrial corridors, in Tamil Nadu and in Uttar Pradesh, to boost the flagship ‘Make in India’ programme that in turn would attract investments as well as encourage employment generation
- E- Biz Portal- The portal will provide a one-stop shop for providing G2B services to investors and business communities in India and help in reducing the delays and complexity in obtaining information and services.
- Mission Raksha Gyanshakti: with the objective of creating greater Intellectual Property in Defence Production Ecosystem.
- Artificial Intelligence in Defence: Creation of Defence Artificial Intelligence Project Agency (DAIPA) in, 2019 for greater thrust on Artificial Intelligence (AI) in Defence.
- Innovations for Defence Excellence (iDEX): The objective of iDEX is bringing startups to innovate, develop technology and solve problems related to defence and aerospace.
Draft Defence Production and Export Promotion Policy (2020):
The Ministry of Defence has formulated a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020) which is envisaged as overarching guiding document of MoD to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports.
The policy has laid out following goals and objectives:
- To achieve a turnover of Rs 1, 75,000 Crores (US$ 25Bn) including export of Rs 35,000 Crore (US$ 5 Billion) in Aerospace and Defence goods and services by 2025.
- To develop a dynamic, robust and competitive Defence industry, including Aerospace and Naval Shipbuilding industry to cater to the needs of Armed forces with quality products.
- To reduce dependence on imports and take forward “Make in India” initiatives through domestic design and development
- To promote export of defence products and become part of the global defence value chains.
- To create an environment that encourages R&D, rewards innovation, creates Indian IP ownership and promotes a robust and self-reliant defence industry.
Issues/Challenges with Defence Production in India:
- Archaic Model of Defence Production– Public enterprises have shown a very low rate of return on the capital invested. This has inhibited their ability to re-generate themselves in terms of new investments as well as in technology development.
- Gross Inefficiency of the DPSUs and OFs- It is worth noting that while there has been some improvement on the issue of Defence Public Sector Undertakings (DPSUs), virtually no action has been taken for improving the management of the Ordinance Factories (OFs), which continue to function as a department-run organisation.
- Inefficiency of DRDO and its Separation from Production Agencies- Some of the problem’s organisation facing the organisation is lack of organizational reforms, poor accountability, meager resources and poor human resource management.
- Dispute Settlement body: There is an urgent need for a permanent arbitration committee which can settle disputes expeditiously. In the USA, the procurement agency DARPA has a permanent arbitration committee which resolves such issues amicably and their decision is final.
- Separation of Procurement from Indigenization- If the separation of R&D from production has been a major problem in India’s industrial defence development, the separation of procurement from production has also been an equally contributory factor
- Structural reform and more power to DRDO in order to enhance its confidence and authority.
- Identification of self-reliance goals backed by technology audit by the Military Industrial Commission, followed by prioritization and perspective planning on Indigenization.
- R&D needs to be given precedence with technology transfer preferences in selective disciplines.
- Integration of Military Maintenance Infrastructure with DPSUs, PSUs, and Private Sector: The military would become relatively freer to focus on its operational ethos. It would enable Indian industry to gain valuable defence technology insights.
- Software Industry and technologies like Artificial intelligence and cyber security should be used to develop and manufacture the “chip” indigenously.
- Efficient Supply Chain is critical for a defence manufacturer looking to optimize costs.
Despite the numerous reform measures undertaken by the Government of India, the Indian defence industry still suffers from several legacy issues which need to be addressed in order to establish an efficient and credible defence industrial base. The reform agenda that needs to be pursued must be multi-pronged one and it needs to be implemented systematically. It should begin with an overarching and integrated institutional structure that would be responsible for the three critical but inter-related functions of procurement, production and R&D.