Indigenous of Defence Supply by 2025

Source: PIB
GS III: National Security and Challenges

Overview

1. News in Brief
2. Indian Army Self-Reliance
3. What is the current scenario?
4. Need for Defence Indigenisation
5. Challenges to India’s Self-Reliance
6. How India is achieving Indigenous of Defence Supply by 2025?

Why in the News?

Army Chief General Manoj Pande has highlighted the importance of self-reliance in defence production, emphasizing that the security of the nation cannot be outsourced or dependent on others.

News in Brief

• Army Chief General reiterated this stance at a conclave, outlining the Army’s efforts towards self-reliance and transformation to meet operational and functional requirements.
• the strategic imperative of self-reliance in defence production and the importance of preparing for future challenges.
• By emphasizing Atmanirbharta and outlining a vision for a modern, technology-enabled force, the Army aims to ensure India’s security in a complex and evolving global scenario.

Indian Army Self-Reliance

• The army is aiming to stop all imports of ammunition from FY 2025.
• The Self-Reliance Index (SRI), which measures the amount of locally produced materials used in defence purchases compared to total defence spending for a year, is very low at just 0.3.
• Self-Reliance Review Committee was constituted in 1992 to formulate a 10-year long-term plan to transit from a minimum SRI of 0.3 to 0.7 by 2005.
  • This aims to reduce the amount of defence purchases from abroad, like weapons and platforms bought by the military and services obtained from foreign suppliers by defence government agencies, to 30% or less.
• With a record allocation of over Rs 6.21 lakh crore for the Financial Year 2024-25 constituting 13.04% of the total Union Budget.

What is the current scenario?

• Russia supplied 65% of India’s weapons purchases of more than $60 billion during the last two decades.

  

  • Russia remained India’s main arms supplier (accounting for 36 per cent of its arms imports).
• India expects to spend nearly $100 billion on defence orders over the next decade.
• India continues to hold the precarious title of being the world’s biggest arms buyer, making up 9.8% of all global arms purchases from 2019 to 2023.
  • Other major importers are Saudi Arabia (8.4%), Qatar (7.6%), Ukraine (4.9%), Pakistan (4.3%), Japan (4.1%), Egypt (4%), Australia (3.7%), South Korea (3.1%), and China (2.9%).
• Stockholm International Peace Research Institute (SIPRI) reveals a 4.7% increase in India’s arms imports between 2014-18 and 2019-23.
• France and the United States are emerging as key suppliers to India, collectively accounting for 46% of its arms imports.

Among the top arms exporters, the United States leads with a 42% share, followed by France (11%) and Russia (11%), China (5.8%), Germany (5.6%), Italy (4.3%), UK (3.7%), Spain (2.7%), Israel (2.4%), and South Korea (2%).

Challenges to India’s Self-Reliance

Increasing the Production

• The foremost challenge is increasing production, at least to a level that meets India’s procurement requirements.
• India has an ambitious production target of US$26 billion by 2025.
• In reality, production has not grown significantly enough to meet the annual procurement requirements of the armed forces.
• For the FY 2023-24, funds have been earmarked in the ratio 67.75:32.25 between Domestic and Foreign procurement in the Capital Acquisition Budget of the Ministry of Defence (MoD).

Lacks of Technological

• India lacks the technological depths to design/manufacture major systems and critical parts, components, and raw materials, which are eventually imported.
• This is the reason why the Indian government still prefers to license manufacture many major systems which indicates the extent of India’s external dependency.
• This is due to weak linkages among academia, R&D establishments, industry, and the armed forces for a robust ecosystem.

Implementation Delay

• While numerous reforms aimed at boosting local production have been proposed, many of them have yet to be fully implemented as intended.
• This situation has led to a delay between the announcement of reforms and their actual execution, including the signing of contracts, production, and delivery.

Need for Defence Indigenisation

Global Market Share

• India’s contribution to the international arms market is very small, representing only 0.2 per cent, which negatively impacts India’s balance of payments.
• India ranked 23rd during the period 2017-21.

Reducing Import

• Largest importer of arms in the world making up 9.8% of all global arms purchases.
• A huge country like India cannot remain dependent on imports in any important sector.
• It will make us dependent on other countries during critical situations fatal for our strategic autonomy.

Boost Export

• 7-8 years ago, defence exports barely touched Rs 1,000 crore now stood at Rs.16000 crore.
• 2028-29, annual defence production will reach Rs 300,000 crore, with defence exports hitting Rs 50,000 crore.
• According to the SIRPI Report largest exporters of major arms and their main recipients, 2019–23, India was not in the top 20.

Impacts Global Geo-political Dynamics

• The fact that its power in regional and global affairs increases with the strength of its armed forces.
• most crucial geopolitical concerns for the Indian armed forces have been their ability to project power and exert influence into the Indian Ocean.
• Terrorism and piracy are security concerns that impact numerous states and can only be resolved through multilateral collaboration.
• Indian Navy has a qualitative and quantitative edge in the region if militarily equipped.

Employment Generation

• Industries that in turn will pave the way for a generation of employment opportunities.
• a reduction in 20-25% in defence related imports could directly create an additional 100,000 to 120,000 highly skilled jobs

How India is achieving Indigenous of Defence Supply by 2025?

Budgetary Allocation

• Budgetary allocation for capital expenditure in Defence for FY 24-25 reaches Rs 1.72 lakh crore, emphasizing ‘Aatmanirbharta.’
• For DRDO: Rs 23,855 crore allocated.
• A notable Rs one lakh crore corpus is dedicated to Deep Tech for long-term loans, promoting innovation in the defence sector.

Aatmanirbharta in Defence

• Positive Indigenisation Lists
  • Fifth Positive Indigenisation List (PIL) of the Department of Military Affairs (DMA) comprising 98 items was released during the plenary session of ‘Swavlamban 2.0’.
  • The list includes Highly complex systems, sensors, weapons and ammunition have been included in the list.
  • All these items will be procured from indigenous sources as per provisions given in Defence Acquisition Procedure 2020 in the staggered timeline.
  • The fourth PIL of 928 items was released by DDP this year.
• Record Defence Production 
  • Value of defence production in Financial Year (FY) 2022-23 crossed the figure of Rs one lakh crore and was Rs 95,000 crore in FY 2021-22.
  • almost a 200% increase in the number of defence licenses issued to the industries in the last 7-8 years by the Government.
• HAL Helicopter Factory
  • The factory is India’s largest helicopter manufacturing facility.
  • Initially produce Light Utility Helicopters (LUHs). The LUH is an indigenously designed and developed three-ton class, single-engine multipurpose utility helicopter.

Defence Acquisition Council Proposals

• Approved in its meetings proposals worth a total of over Rs 3.50 lakh crore to enhance the operational preparedness of the Armed Forces in 2023.
• Approval in respect of Acceptance of Necessity (AoNs) for various Capital Acquisition Proposals amounting to Rs 2.23 lakh crore.
• DAC accorded AoN for capital acquisition amounting to over Rs 70,500 crore under Buy (Indian-IDDM (Indigenously Designed, Developed and Manufactured)).

Department of Defence Production

• To give fillip to the ongoing indigenisation portal was launched in August 2020.
• MoD has successfully indigenised 10,451 items during the period of 3 years since the launch of the Srijan Portal.
• Start-up promotion was a focus area at Aero India-2023 with Indian Start-ups being showcased at an exclusive iDEX pavilion.
• A concerted effort was made towards forging B2B partnerships at the ‘Bandhan’ ceremony and more than 250 such partnerships with a total value of more than Rs 75,000.

Boosting Defence Exports

• Export leads received from various stakeholders are being disseminated to the registered Indian Defence Exporters through an online portal.
• This facility helps the Indian defence exporters to quickly respond to export opportunities arising in other countries.
• iDEX in partnership with US DoD conducted the India-U.S. Defence Acceleration Ecosystem (INDUX-X).
• Provisions of Government funding have been introduced for Make-I, Technology Development Fund (TDF) and Innovations for Defence Excellence (iDEX) projects.

Indigenous Manufacturing

• The government has implemented substantial measures to simplify the industrial landscape.
• These actions involve making industrial licensing processes more straightforward, extending validity periods, and loosening restrictions on foreign direct investment (FDI), now allowing up to 74% FDI through the automatic route.
• Additionally, there has been a notable increase in the share of domestic procurement, rising from 54% in 2018-19 to 68% in the current year, with 25% specifically allocated for private industry.
• Over the past four years (2018-19 to 2021-22), there has been a significant decrease in defence procurement from foreign sources, dropping from 46% to 36%.

Defence Industrial Corridors

• Two Defence Industrial Corridors have been established in Uttar Pradesh and Tamil Nadu to boost the Defence Manufacturing ecosystem in the country with the intent to attract investment of Rs. 10,000 Crore.
• Uttar Pradesh Defence Industrial Corridor (UPDIC), Uttar Pradesh Expressways Industrial Development Authority (UPEIDA), the nodal agency, has signed 138 Memoranda of Understanding (MoUs) with industries etc.
• An actual investment of Rs. 2656 Crore has been made in UPDIC. In Tamil Nadu Defence Industrial Corridor (TNDIC), Tamil Nadu Industrial Development Corporation (TIDCO), the nodal agency, has made arrangements through 57 MoUs etc.
• An actual investment of Rs. 4085 Crore has been made in TNDIC.

Way Forward

• Atmanirbhar Bharat Abhiyan has begun to positively impact the Indian defence industry, as seen in its growing production and exports.
• We also need to speed up the defence procurement process to help the industry make and deliver weapons as quickly as possible.

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