Defence Manufacturing under Make In India 

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INTRODUCTION


We hope to put India among the top five defence hardware producers in the world by 2025 by incentivising local manufacturing” – announced Dr Ajay Kumar, Secretary, Defence Production, Government of India. In January 2018, the Government released a list of Make-II projects aimed at boosting private sector participation by offering 50 projects where private industries can come up with solutions the MOD guarantees it will buy. This is meant to allay a key industry fear- ‘that the government does not buy products the industry spends time and money to develop’. The MOD also created a ‘Defence Investor Cell’ under the department of Defence Production as a single- point interface with investors.

DEFEXPO 2018

The significant event unfolds near the Chennai- Bengaluru Defence industry corridor proposed in this year’s budget. This corridor links up the giant L&T shipyard in Kattupalli, north of Chennai with the SME hub in Coimbatore, the six state- owned ordnance factories in Tamil Nadu and Hindustan Aeronautics Limited in Bengaluru. On 23 March 2018, the MoD released a draft defence industrial manufacturing policy, providing a framework to its goal of making weapons indigenously and reversing India’s dependence on imports, as high as 70%. The policy, to be notified later this year, hopes to make India self- sufficient in military hardware by 2025. Dr Ajay Kumar points towards the turnaround in ‘mobile manufacturing’ where India went from being a net importer to become self-sufficient over the past 4 years, to indicate why this is possible.” In 2014, our turnover of manufacturing mobile phones was Rs 19000 crore. Today it stands over Rs 90,000 crore.”- says Dr Ajay Kumar. At the 10th edition of the biennials DefExpo, a land, naval and homeland security exhibition which begins near Chennai on 15 April 2018, MoD intends to make it a grand splash of ‘Make in India’.MoD intends to conduct a live fire demonstration of a prototype Indian howitzer Gun at the venue, shooting into Bay of Bengal. The proposal was nixed after sensible advice prevailed. It’s tag- line showcases India as an ‘emerging defence and manufacturing hub’ and comes after a three- month policy barrage from Union Minister for Defence, Nirmala Sitharaman aimed at reviving a comatose ‘Make in India’ defence policy.

Proposed Defence Manufacture policy

India procures around Rs 1.25 lakh crore worth of defence products while the public sector manufacturers, Ordnance Factories and private industries manufacture around 40%. The rest of the demand, is met through imports. Reversing this trend is a real challenge. This is what our present government set out to do through ‘ Make in India’ project. The force- multiplier effect of creating a military- industrial complex capable of meeting its requirements are laid out in the draft policy for defence manufacturing – a turnover of approx. $25 billion( Rs 1.6 lakh crore) and two- three million jobs.

Make in India- Is it a non- starter?


Four years later, after all the fanfare, ‘Make in India’ is virtually a non- starter if we do a performance appraisal. This has reflected in the abysmal FDI intake for the defence sector despite the government policy initiatives. In 2016,the government relaxed foreign participation restrictions in Indian companies from 26 to 49%. Government permission would be needed only for ownership above that. Despite this policy thrust, only Rs 1.17 crore worth of FDI has come in till December 2017. Other sectors have attracted Rs 3.86 lakh crore in the same period. Meanwhile, embarrassingly for the government, the only substantial Make in India defence project has been a Rs 4,600 crore contract to manufacture 100 K-9 “Vajra” self- propelled Howitzers at the L&T facility in Hazira, Gujarat. This delay comes at an alarming tri-junction- the collusive threat from China- Pakistan, a bulk of the armed forces’ Soviet- era fighter jets, tanks and submarines reaching metal fatigue and the end of their service lives. The budget to buy their replacements are also shrinking, not being catered in the defence budgets. Adding to this dismal state of affairs, is the leadership uncertainty. The present government already has had four defence ministers in four years depriving an already lethargic system of continuous political oversight. We all are aware weapon acquisition is a slow, painful process. It takes years to draft armed forces’ requirements, float global tenders, test the weapons, negotiate prices and sign the purchase contract. Defence hardware is only manufactured after a contract is signed since it is custom made. Hence in India it takes anything from 6 – 10 years to induct military hardware to our armed forces inventory. The K-9 Vajra deal signed with South Korean firm Hanwha – Techwin took 6 years to complete its first delivery of guns.

CONCLUSION

A realistic approach towards defence acquisitions needs to be adopted by MoD. A Parliamentary Standing Committee on Defence has blasted the government for inadequate budgetary support, on 13 March, pointing out that the Rs 21, 388 crore allotted for buying new weapons was grossly inadequate to pay for the 125 ‘ongoing purchase deals’ worth Rs 29,033 crore. Lt Gen PR Shankar, former Director General, Artillery and currently, Professor, Department of Aerospace Engineering , IIT Madras, rightly quipped-“ Countries will buy our arms only once they are proven in the Indian Armed Forces. Hence procurement processes must be refined. If the system is crippled by multiple and diffused structures with no single point accountability, multiple decision heads, duplication of processes, delayed execution, no real- time monitoring, no project- based approach, and a tendency to fault- find than facilitate, leaving loop-holes for corruption, our target of exporting minimum $ 5 Billion worth of arms will remain a ‘pipe dream’.

JAI HIND