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It retains tag of top importer, but New Delhi is now a supplier for global manufacturers and is making more equipment for itself
AFTER having emerged as a global hub for manufacturing automobiles, India is now graduating to making weapons, arms, ammunition, warships and planes for the international market and also for its own use.
‘Make in India’ in defence equipment manufacturing is no more an elusive mirage. New Delhi is emerging as a supplier for international arms manufacturers and correspondingly is making more equipment for itself, eschewing imports.
In August 2020, the Government announced a target of touching $5 billion in exports annually by 2025 and domestic defence production at $25 billion annually. In the just-ended fiscal, military equipment exports stood at Rs11,607 crore ($1.54 billion). Just five years ago, for the fiscal ending March 31, 2017, exports were Rs1,522 crore (approximately $200 million).
For the fiscal ending March 2021, the total domestic production — private and public — stood at Rs84,667 crore (approximately $11.2 billion) — and is well on its way to the $25 billion targets. The numbers could be greater for the fiscal ending March 2022.
Dichotomy of Import
Despite locally making warships, fighter jet Tejas, nuclear submarine INS Arihant, and missiles like Akash and BrahMos, New Delhi keeps on emerging among the top-two global importers of weapons.
Sweden-based think tank Stockholm International Peace Research Institute (SIPRI), in its report last month, compared two five-year blocks — between 2012-16 and 2017-21 — saying Indian arms imports decreased by 21 per cent. “Despite this, India was the world’s largest importer of major arms in 2017-21 and accounted for 11 per cent of total global arms imports in the period,” the report said.
In the same report, India is mentioned at the 23rd spot among the top 25 exporters of weapons, with Myanmar, Sri Lanka and Armenia being its top customers. And this does not include the $374.96 million export order for the BrahMos missile to the Philippines inked in January this year.
A large part of India’s import bill stems from ongoing projects, including the maritime plane Boeing P-8I, the Rafale fighter jets, the S400 air defence missiles, the submarine-hunting helicopters MH60R, ultra-light howitzers M777, aircraft engines for the Tejas, engines for warships, besides spares.
Amit Cowshish, former financial adviser, Ministry of Defence, explains: “India cannot altogether avoid importing equipment. It will take time for the Indian industry to design, develop and manufacture major equipment, weapon systems and platforms. Till then, such items may have to be imported directly or procured from the Indian companies who can manufacture them in India by tying up with the foreign manufacturers.”
Four Categories For The Future
India now has four clear demarcations in the military equipment market. First, it continues to import selected niche technologies. Second, exports are growing and will show up in a big way. Third, Indian private companies now make entire systems, parts and components for global manufacturers while also being suppliers to the Indian armed forces. And fourth, Indian private companies are in joint ventures with foreign manufacturers and have joined their global supply chains.
The emergence of the Indian private defence industry is a success story. Bengaluru-based Dynamitic Technologies is making aerostructures for global companies like Bell, Airbus and Boeing. Idea Forge, which got a contract recently from the Indian Army for smaller tactical UAVs, now has an export order.
Kanpur-based Lohia Group is into 100 per cent exports. Bharat Forge and Tata are making artillery guns for the Army. Larsen and Toubro (L&T) are making guns, warships and hulls of nuclear submarines. Bengaluru-based New Space and Technologies has inked a contract with the MoD to make a high-altitude communications and surveillance ‘pseudo satellite’ that can remain airborne for months.
Pavitra Goel, General Manager, Lohia Aerospace Systems, says, “Creating products for the world market requires establishing and adhering to global standards.”
The other side of the success story is joint ventures. Airbus has tied up with Tata to make the C295 military planes in India. The world’s biggest military equipment company, Lockheed Martin, has certified that fighter wings made at the Tata-Lockheed Martin facility at Hyderabad are part of the global supply chain. Adani makes complete carbon composite Aerostructures for Hermes 900 UAV for Israeli company Elbit.
Mahindra is making the ULH M77 guns in collaboration with BAE Systems and separately has a contract with the Indian Navy to make submarine warfare suites. Boeing has a joint venture with Tata for making Aerostructures of helicopters.
SP Shukla, president of the Society of Indian Defence Manufacturers (SIDM) and chairman of Mahindra Defence, says, “Several Indian firms, especially MSMEs, have integrated with foreign manufacturers to make India a part of the global supply chain.”
The future for India is making the next generation fighter jet called the Advanced Medium Combat Aircraft (AMCA) on its own. A design is being readied. The stumbling block — having a jet engine — has been removed. A tie-up is on the cards with French company Safran to make a jet engine. Safran has a joint venture with Hindustan Aeronautics Limited to make helicopter engines.
The future is Artificial Intelligence, unmanned fighter jets, armed UAVs and robotics. These are in various stages of development. The capital budget meant for the acquisition of equipment for this fiscal will be Rs1,52,370 crore ($20 billion), which is a 76 per cent jump over Rs86,741 crore allotted in 2013-14. About 68 per cent of capital spending will be on domestic sources. Research and development (R&D) now have a budget of Rs11,981 crore; start-ups, academia and private industry are to be allowed to claim 25 per cent of it.
In the past three years, the MoD has accorded Acceptance of Necessity (AoN) – the first step to procure — for equipment worth Rs2,47,515 crore from domestic makers. Out of the total 191 acquisition contracts signed in three years, 121 were with Indian vendors.
The Defence Acquisition Council led by Defence Minister Rajnath Singh has cancelled nine proposals of import worth Rs46,695 crore. Innovations for Defence Excellence (iDEX) is engaging industries, including MSMEs, start-ups, individual innovators, R&D institutes and academia, with a budget of Rs498.78 crore for financial support.
The MoD announced that 18 major defence platforms will be made with private industry leading the design and development. The ‘positive indigenisation list’ now has 2,851 items, which cannot be imported after a pre-decided cut-off date. Of the 19,509 defence items listed for local production, the industry is interested in 4,006.
“The expenditure on defence procurement from foreign sources has gone down from 46 per cent to 36 per cent, thereby reducing the import burden in the last three years, from 2018-19 to 2020-21,” the Minister of State for Defence Ajay Bhatt informed the Lok Sabha.
The Defence Production and Export Promotion Policy (DPEPP) is looking to provide a focused thrust to defence production capabilities, including aerospace and naval shipbuilding sectors.
The Big ‘Make In India’ Plans
Hypersonic Glide VehicleDirected energy weapons (300 KW and more) — High-powered electromagnetic devices and high-powered laser devices
Naval Ship-borne Unmanned Aerial System
Light weight tankSelf-healing mine fields
Unmanned autonomous AI-based land robot127 mm naval gun127 mm guided projectile
Electric propulsion (engines) for ships
Standoff airborne jammer
Li-ion cells/Li-sulphur cells (Portable high capacity energy systems replacing the conventional hydrocarbons)
Communication system (Switches, routers, encryptors & VOIP phones)
Electro optical with high-resolution sensingLong range unmanned aerial vehicles (UAV) in SPV mode
Indian multi-role helicopter in SPV mode
Low orbit pseudo satellites
Anti-jamming systems for multiple platforms