The Defence Acquisition Procedure is aimed at helping the country gain a stronger foothold on its production of arms and reduce dependence on external agencies

In August 2020, India’s Defence Minister announced an embargo for 101 Items with the aim to boost indigenisation of defence production. Following this, the Defence Acquisition Procedure (DAP 2020) was announced with a similar aim of defence indigenisation that is to promote self-reliance in defence production and reduce external dependence. Various other steps have been taken like the establishment of defence corridors, and the iDEX initiative among others.

This calls for an understanding of the ‘Why’ behind the government’s recent stance of defence indigenisation, steps taken by them to promote this and the challenges that lie ahead.

India, unfortunately holds a distinction of being the world’s second largest arms importer. Saudi Arabia surpassed India to become the largest importer. Notably, Russia is the largest arms supplier to India, accounting for 49% of India’s imports.

This results in concerns of various dimensions for India, including economic, geopolitical, and strategic. Economically, this has led to the rise of the import bill for India which in turn contributes to the rising Current Account Deficit. Further, India procures 60% of its weapon systems from foreign markets which increases its strategic vulnerability. Considering the geopolitical situation around the Indian borders, external dependence and extra dependence on a single player is also worrisome. Hence India needs a solid indigenous defence manufacturing capacity.

A Step Towards Self-Reliance

Indigenisation would help in furthering the objectives of ‘Make in India’ in the intermediate term which is in accordance with the ‘Atmanirbhar Bharat Initiative’ of the government. In the long run, it would take India closer to its dream of ‘Make for the World’.

In 2018, the government rose to this occasion and initiated iDEX (Innovations for Defence Excellence) in order to contribute towards the modernisation of the defence industry. iDEX aims to promote innovation and technology development in the areas of defence and aerospace while simultaneously engaging MSMEs, start-ups, individual innovators, R&D institutes and academia.

In 2019, the government decided to set up defence industrial corridors in Uttar Pradesh and Tamil Nadu which were meant to ensure connectivity among the various defence industrial units and effectively utilise the existing potentialities of PSUs. This was also to attract private sector investments, which is much needed.

In 2020, the government announced a ban on 101 items and more aptly has announced that the list shall be progressively reviewed and expanded every year by the newly created Department of Military Affairs (DMA). Further, the DAP 2020 encourages FDI in defence to establish defence manufacturing hubs in the country. Notably, the indigenous content requirements have been raised in the DAP 2020.

A Draft Defence Production and Export Promotion Policy was also announced in 2020 through which the government aims to achieve a turnover of `1,75,000 crore including export of `35,000 crores in aerospace and defence goods and services by 2025; but that is yet to be finalised.

Nevertheless, the execution necessitates a transformative reset. Intent, unquestionably, is good but the intent for execution needs to be better. The multiple stakeholders, viz. private players, both domestic and foreign, need to be apprised about the requirements of the Armed Forces so they are better prepared to realise the goal of indigenisation.

What we have acquired in the space sector needs to be replicated in defence as well.