India’s Indigenous Defence Production
Kartavya Desk Staff
Syllabus: Internal Security
- •Source: TH*
Context: India’s indigenous defence production reached a record ₹1.27 lakh crore in FY 2023-24, growing 16.7% from the previous year, per the Defence Ministry.
What is Indigenous Defence Production?
Indigenous defence production refers to the development and manufacturing of defence equipment and technology within a country’s own borders, using its own resources, skills, and industries. This approach aims to achieve self-reliance and reduce dependence on foreign imports for defence needs.
According to the Stockholm International Peace Research Institute (SIPRI), India was the world’s largest importer of major arms between 2019 and 2023, accounting for 9.8% of global arms sales
Need for defence indigenisation:
• For self-reliance
• To reduce dependency on the foreign player and ensure the security of the nation
• To reduce the Balance of Payment deficit
• To promote employment and also exports
• To reduce the cost of production to India and thereby reduce fiscal deficit.
Key Highlights of India’s Defence Production:
• Over 79% of defence production was contributed by DPSUs/PSUs, and nearly 21% by the private sector.
• Since 2019-20, the value of defence production has increased by over 60%.
• By 2028-29, annual defence production is expected to reach ₹3 lakh crore, with defence exports hitting ₹50,000 crore.
Background of Defence Indigenisation in India:
India shifted from Soviet-dependent license-based production to indigenous design-focused defence industrialization in the mid-1980s, emphasizing R&D. A significant step was the 1983 Integrated Guided Missile Development Programme (IGMDP) for developing five missile systems: Prithvi, Akash, Trishul, Nag, and Agni. Despite the 1990 Self Reliance Review Committee’s goal to boost the self-reliance index from 30% to 70% by 2005, this target remains unmet. Insufficient indigenous efforts led to co-development and co-production with foreign partners, starting with the 1998 India-Russia BrahMos missile agreement, and extending to collaborations with Israel and France.
Potential of Defence Indigenisation in India:
• Rising Demand: The Indian defence manufacturing industry is growing due to national security concerns and ongoing territorial disputes with Pakistan and China.
• Growth Opportunities: India’s proactive foreign trade policies and joint defence manufacturing agreements with countries like the UAE, Kazakhstan, and the US offer significant growth potential.
• Experienced Industry: India has the necessary manpower and industries, such as the Ordnance Factory and HAL, actively contributing to defence indigenisation. Three Indian companies (HAL, Ordnance Factory Board, BEL) are among the top 100 defence companies globally.
• Future Contracts: The defence ministry estimates potential contracts worth ~₹4 lakh crore (US$ 57.2 billion) for the domestic industry in the next 5-7 years (2025-2027).
Success Achieved:
Key Achievements | Details
INS Vikrant Development | Millennium Aero Dynamics and Cochin Shipyard jointly developed and produced INS Vikrant, India’s first indigenously built aircraft carrier.
Indigenous Nuclear Submarine | BARC and DRDO jointly developed India’s first indigenous nuclear submarine, Arihant.
Missile Development | Under the Integrated Guided Missile Development Programme (IGMDP), India developed 5 missiles: Akash, Prithvi, Agni, Trishul, and Nag.
Helicopter and Aircraft Development | HAL and Taneja Aerospace and Aviation Limited (TAAL) are developing Dhruv multirole helicopters, Light Combat Helicopter (LCH), Rudra armed helicopter, and manufacturing Tejas Light Combat Aircraft.
IRST System Development | HAL and Bharat Electronics Limited (BEL) signed a contract for the co-development and co-production of the Long Range Dual Band Infra-Red Search and Track System (IRST) for the Su-30 MKI under the MAKE-II procedure of Defence Acquisition Procedure (DAP) 2020.
Unmanned Aerial Vehicle Development | DRDO is currently developing an indigenous unmanned aerial vehicle named Nishant.
Growth in Exports | Defence exports surged from ₹1,940 crore (US$ 255 million) in 2014-15 to over ₹15,000 crore in 2022-23 (at 21000 cr currently)
Export Deals with Countries | Indian defence companies are exporting to over 85 Friendly Foreign Countries (FFCs) in Africa, South Asia, Southeast Asia, and West Asia.
Reasons for Increase in Exports | The surge in exports attributed to policy initiatives and private sector involvement, contributed 70% to total defence exports in FY 2021-22.
Policy Initiatives: Liberalising FDI policies, issuing Positive Indigenisation Lists, and simplifying export procedures have contributed to growth in defence exports.
Future of Indian Exports: The Draft Defence Production & Export Promotion Policy (DPEPP) 2020 aims to export ₹35,000 crore worth of aerospace and defence equipment annually by 2025, aligning with the goal of achieving a ₹1.75 lakh crore (US$ 25 billion) turnover in defence manufacturing.
Government’s Initiative towards Defence Indigenisation:
Government’s Initiative | Details
Defence Acquisition Procedure (DAP) 2020 | Streamlines defence procurement under Atmanirbhar Bharat Abhiyaan, emphasizing Make in India and MSME benefits. Key features include:
Reservation for Indian Vendors: Encourages domestic industry with up to 100% FDI allowed (74% Automatic, beyond 74% Government route).
Enhancement of Indigenous Content: Focus on procuring indigenously manufactured products and technologies.
Make and Innovation: Supports indigenization through Make I/II/III initiatives and iDEX for startups.
Buy (Global-Manufacturing in India): Mandates manufacturing processes be conducted by Indian subsidiaries of foreign investors.
Ease of Doing Business: Simplifies operations through the Project Management Unit, favouring complete product manufacturers.
Innovations for Defence Excellence (iDEX) | Engages MSMEs, start-ups, individual innovators, R&D institutes, and academia with grants, funding, and support.
SPRINT Challenges | A NIIO-DIO initiative to integrate at least 75 new indigenous technologies/products into the Indian Navy.
Indigenous Manufacturing | Simplifies industrial licensing extends validity periods, and liberalizes FDI policy (up to 74% Automatic). Defence procurement from foreign sources reduced from 46% to 36%.
Defence Industrial Corridors | Established in Uttar Pradesh and Tamil Nadu to create regional aerospace and defence hubs.
Positive Indigenisation Lists | Prioritizes procurement from domestic sources under the Buy Indian (IDDM) category with embargoes on imports.
E-Biz Portal | Digitizes application process for Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM).
Challenges in Defence Indigenisation
• Lack of a defence manufacturing base in India.
• Low private participation due to the absence of a permanent arbitration committee for dispute resolution.
• Conflict between manufacturers and defence forces on equipment design and capacity.
• High costs and lack of an assured market, lead to delays and credibility issues.
• Poor technological transfer by foreign companies.
• Bureaucratic delays and licensing issues hinder the ease of doing business.
Way Forward for Defence Indigenisation
• Ensure a level playing field for private industry, DRDO, DPSUs, and OFB.
• Utilize software industry and technologies like AI and cyber security.
• Provide financial and administrative autonomy to DRDO.
• Improve in-house design capabilities, as seen with the Navy’s success.
• Develop a robust supply chain, with Indian SMEs playing a key role in the global OEM supply chain.
Conclusion
Going ahead, the requirement for higher indigenous content is expected to help defence product manufacturers in India as well as encourage foreign companies to set up operations in India. France and Russia have already agreed to manufacture in India.
Insta Links:
• India’s Defence Exports Reaches an All-time High
Mains Links:
• Foreign Direct Investment (FDI) in the defence sector is now set to be liberalized: What influence this is expected to have on Indian defence and economy in the short and long run? (UPSC 2014)
Prelims Links:
What is “Terminal High Altitude Area Defence (THAAD)”, sometimes seen in the news? (UPSC 2018)
A. An Israeli radar system
B. India’s Indigenous anti-missile programme
C. An American anti-missile system
D. A defence collaboration between Japan and South Korea
Answer: (c)
Which one of the following is the best description of ‘INS Astradharini’, that was in the news recently? (UPSC 2016)
A. Amphibious warfare ship
B. Nuclear-powered submarine
C. Torpedo launch and recovery vessel
D. Nuclear-powered aircraft carrier
Answer: (c)