India’s pressure for self-sufficiency ends public-private divide
NEW DELHI – India’s drive to achieve industrial self-sufficiency has led the government to approve new defense projects worth $ 51.71 billion and twice to implement arms embargoes.
The new defense projects fall under the country’s Make in India economic program, according to the Defense Ministry, which also adopted two “positive indigenization” lists totaling 209 items (the first had 101 and the second had 108) .
The first list of 101 defense items was published by the Ministry of Defense in August 2020. It included several types of weaponry such as artillery guns, assault rifles, corvettes, sonar systems, transport planes, munitions, sonars, radars, conventional diesel-electric submarines, communications satellites and on-board cruise missiles.
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This second list must be gradually implemented from December 2021 to December 2025. It provides for the manufacture of a certain number of weapons and platforms in India, in particular new generation corvettes; single-engine light helicopters; airborne early warning and control systems; medium power radars for mountainous terrain; medium-range ground-to-air missile systems; fixed-wing mini-UAVs; helicopter launched anti-tank guided missiles; battlefield surveillance radars; anti-material guns; and mine-protected combat vehicles for infantry units.
The majority of the items on the second list are subsystems or accessories for weapons and platforms already made in India, and are not expensive defense products. They include instant fire detection and extinguishing systems; personal underwater breathing apparatus; main switchboards and power distribution systems for ships; steering gear for destroyers and frigates; high altitude water purification systems; and drop tanks for the Jaguar and Mirage 2000 fighters.
The strategic partnership model as well as the corporatization of the Ordnance Factory Board and its 41 munitions factories are also among the many national defense industry stimulus initiatives. This decision saw the group split into seven corporate entities.
“Siled development and isolated innovation are outdated ideas,” said Baba Kalyani, chairman of India-based Bharat Forge Limited. An alternative path involves public-private partnerships, in which private industry, public sector companies and the government’s Defense Research and Development Organization work together to complement each other’s capabilities, Kalyani added.
However, other industry leaders and defense analysts do not believe India’s defense industry is mature enough to benefit from this approach; public sector companies are thriving, but the private sector is struggling. And there has been little structural change regarding the Indian defense industry in recent years, despite the rhetoric of “self-reliance”.
The public sector obtains most defense contracts and India is the world’s largest importer of arms, according to the Stockholm International Peace Research Institute.
“These are the two key objective parameters against which the performance of the Indian defense ecosystem should be measured,” said Vivek Rae, the former head of defense procurement for the Ministry of Defense.
But since the government opened up defense companies to private companies in 2002, there has been steady progress towards self-reliance, especially over the past seven to eight years, according to the Society of Indian Defense Manufacturers, an association local industrial.
Private companies that have matured and developed through participation in indigenous systems and weapons development programs have built up a track record of success in IDDM (Indigenous Designed, Developed and Manufactured) products, said the head of SIDM, Jayant Damodar Patil.
Patil, who is also senior executive vice president of Larsen & Toubro’s defense unit, said private defense companies are also creating success stories in the local production of complex systems in partnership with equipment manufacturers from foreign origin.
Kalyani said the private sector is adapting better to rapidly changing technology and that with continued government support India will realize its dream of becoming self-sufficient and a competent exporter of defense and aerospace products. .
“It will take time, but we will surely be there as a net defense exporter in the next 10 years,” Kalyani predicted.
India plans to spend around $ 150 billion on defense modernization to achieve a goal of 70% self-sufficiency in arms production by 2027. In addition, the Ministry of Defense has set a target national defense production of $ 25 billion by 2025, including $ 5 billion in defense exports. .
The ministry has also earmarked $ 10 billion of the capital procurement budget for the purchase of weapons and platforms only from domestic companies. This effort is part of the current defense budget 2021-2022. Last year, the ministry spent $ 7.28 billion buying weapons from domestic companies, nearly 80 percent of whose contracts were awarded to public sector companies.
India’s defense industry is currently made up of nine public sector companies and 41 government-controlled munitions factories; the private sector is made up of two dozen large enterprises, over 100 medium-sized enterprises and around 6,000 small and micro enterprises. However, the average annual national defense production amounts to $ 10 billion in business. Of this amount, approximately $ 4.5 billion is spent on sourcing defense technology abroad in the form of sub-assemblies and sub-systems.
Essentially, the private sector finds itself relegated to the role of contracting out to the public sector – a mindset that must change before India can achieve a self-sustaining defense and aerospace manufacturing industry, said Rajiv Chib, CEO of Insighteon Consulting.
Patil added that the Defense Ministry must create a level playing field, in part by funding private sector research and development programs.
For Rae, the former head of the ministry, the government should create the post of procurement czar, with a mandate and authority similar to that of the US Department of Defense’s undersecretary for procurement and sustainment. This would improve the coordination and management of all aspects of defense procurement, he added.
Chib noted that India’s heavy use of government-run defense labs and its preference for public sector manufacturing is based on an old Soviet model – something she must reject if she is to stick with it. large western defense companies.