Make In India in Defence – Recent Reforms & Successes

Some important points to remember –

  1. India has 3rd largest armed forces in the world
  2. India meets 60% of her defence needs through imports
  3. India is largest importer of arms in the world b/w 2012 & 2016 accounting for 13% of global arms imports (followed Saudi Arabia and UAE) =>Heavy reliance on imports => FD, CAD, slow armed forces modernisation process, scams in procurement puts National Security at risk => World’s largest democracy can’t depend on other nations for fulfilling her defence needs
  4. In last 3-4 years India has diversified her imports. Now apart from Russia (1st), India imports arms from USA (2nd), Israel (3rd) and France => Atleast 60% of total armed equipments in India are of Russian/USSR origin
  5. India aims to increase defence exports to $2bn by 2019

Recent policy reforms to boost Make in India in Defense

  1. 100% FDI now allowed in defence sector of which 49% is through automatic route.
  2. In DPP-2016 (Defense Procurement Policy), MoD has introduced new category Buy IDDM (Indigenously Designed Developed and Manufactured), will now be the most preferred acquisition category => to encourage indigenous design, development and manufacturing of defence equipments & reduce reliance on imports => Other categories include ‘Buy (Indian)’ category which, in turn, is placed above the other categories, namely the ‘Buy and Make (Indian)’, ‘Buy and Make’ and ‘Buy (Global)
  3. New Blacklisting Policy cleared by DAC, MoD => so that the critical domain of modernisation of armed forces doesn’t suffer on accounts of scams, corruption, red tape

Recent successes

    1. Joint development of 4th generation plus Tejas multirole fighter jet by HAL and ADA (DRDO)
    2. India getting inducted as a member to MTCR, an elite club of nations, dealing with trade & export of missiles and related items/technologies => India & Russia working on BrahMos 2.0, the hypersonic version of BrahMos + Ahead of PM Modi visit to USA, USA cleared sale of the Guardian Drones to India (will boost India’s deterrence ,border and maritime surveillance capabilities especially in IoR + India-Pak and India-China borders)
    3. USA has accorded India with its major defence partner by amending National Defense Authorisation Act (NDAA 2017) => India will be treated at par with the NATO nations and closest allies of USA like Japan when it comes to state of the art defence imports (however, the ToT [Transfer of Technology] remains a contention due to transaction nature of USA)
    4. India and USA have signed DTTA (Defense Technology and Trade Initiative) & India is the Only nation to have a India Rapid Reaction Cell inside the Pentagon => both nations will closely work to develop state of the art defence platforms under DTTI like Jet engines and aircraft carriers
    5. Recent JVs in defence sector

 

 

a. India-Russia JV for development of Kamov Ka-226T combat helicopters

b. Airbus & Mahindra defence to jointly manufacture defence helicopters in India

c. BAE systems and Mahindra will jointly manufacture M777 ultra-light Howitzer guns under MII

d. Boeing & TATA have announced joint manufacture of aerostructures of Apache helicopters

e.    TATA and Lockheed Martin have announced joint manufacturing of F-16 fighter jets in India  

DPP 2016 – Salient features

Critical factors which will define future trajectory and success of MII in Defense

  1. Degree of inclusion of private sector players in defense research and manufacturing
  2. Regulatory efficiency and transparency => Ease of doing business
  3. Political leadership and willpower
  4. Inclusion of academia and young entrepreneurs in innovation in defense products and platforms
  5. Success of one of the initiatives under IMPRINT Project by MHRD reg Advanced Defense Manufacturing by IIT-Madras

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