From UPSC perspective, the following things are important :
Prelims level : NA
Mains level : Boosting indigenous defence production
India ranks fourth among 12 Indo-Pacific nations in self-reliant arms production capabilities, according to a study released this month by the Stockholm International Peace Research Institute (SIPRI).
Study on Defence production
- China tops the list, Japan is second, South Korea is in third place, and Pakistan is at number 8.
- The study, which measures self-reliance until 2020, is based on three indicators of self-reliance in each country:
- Arms procurement — imports, licensed and domestic production as a proportion of the government’s total procurement of major conventional arms;
- Arms industry — the study presents the five largest arms companies in each country, where data are available, ranked by sales of arms and military services in 2020 to both domestic and export customers;
- Uncrewed maritime vehicles, the sea equivalent of drones — covering both uncrewed surface vehicles (USVs) and uncrewed underwater vehicles (UUVs), meant to provide a qualitative understanding of how countries are engaging domestic research institutes and firms to produce such cutting edge systems.
How has China progressed?
- China was the world’s fifth largest arms importer in 2016-20.
- Its self-reliance policies, and its high economic growth in that period meant that the Chinese arms industry now increasingly fulfils the requirements of the People’s Liberation Army (PLA).
- Its high volume of imports in absolute terms accounts for only 8 per cent of total procurement for the period, the lowest share for any of the 12 governments studied in this report.
Why is India still lagging behind?
- India is ranked as the second-largest importer of arms for its armed forces in 2016-20.
- India is highly dependent on imports of complete foreign major arms, including many produced under licence or as components for its domestic production.
- Of India’s total volume of procurement in 2016–20, 84 per cent was of foreign origin.
- Domestic arms companies provide only 16 per cent of its total procurement.
Steps taken by the Centre to boost defence production
- Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
- Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
- Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
- Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.
- Defence Industrial Corridors: The government has also announced 2 dedicated Corridors in the States of TN and UP to act as clusters of defence manufacturing that leverage existing infrastructure, and human capital.
- Long-term vision: The vision of the government is to achieve a turnover of $25 bn including export of $5 bn in Aerospace and Defence goods and services by 2025.
- Push for self-reliance: The govt has identified the Defence and Aerospace sector as a focus area for the ‘Aatmanirbhar Bharat’ or Self-Reliant India initiative.
Issues retarding defence indigenization
- Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
- Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
- Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
- Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
- ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
- Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
- Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
- FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
- R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
- Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.
- Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
- Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
- Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
- Employment generation: Defence manufacturing will lead to the generation of satellite industries that in turn will pave the way for a generation of employment opportunities.