Context:

India is the largest importer of defence equipment in the world

Introduction:

  • India has the third-largest armed force in the world.
  • India is one of the largest importers of conventional defence equipment and spends about 40 per cent of its defence budget on capital acquisitions.
  • In 2015, the budgetary allocation for defence was Rs 2.6 lakh crore, an increase of over 7 per cent.
  • India is the largest buyer of Israel’s military hardware

Background:

  • Indian defence production was confined to Defence Public Sector Units (DPSUs) till 2001.
  • About 90 per cent of domestic defence manufacturing is currently done in the public sector, by the 9 DPSUs and 39 OFs. Since 2001, when private participation was allowed in defence sector, 222 letters of intents and industrial licences have been issued to around 150 firms. Of these, only 46 firms have commenced production so far.
  • India had started with the Tejas program long way back in 1989, but due to change in political power and will, it went on delaying and more delaying.
  • India’s severe dependence on foreign suppliers for defence equipment and munitions was highlighted in the aftermath of the 1971 India-Pakistan war.
  • Then cabinet committee on security (CCS) decided that India needed to indigenize weapon platforms, such as the main battle tanks, which were being imported, mostly from the erstwhile Soviet Union

Related statistics:

Key provisions of the 2016-17 Union Budget:

  • Provision of USD 34.53 billion for defence services in the FY 2016-17 Union Budge
  • Capital outlay for Defence in 2016-17 is kept at USD 12.09 billion
  • Out of this, USD 10.75 billion has been allocated for Capital Acquisition of the Defence Service
  • USD 1.33 billion has been provided under “Other than Capital Acquisition” segment for capital expenditure to Army, Navy, Joint staff and Air Force.

 

India’s imports:

  • India has been the world’s largest arms importer every year since 2010, as its defence industry struggles to keep up with its international ambitions.
  • It imports 70% of its weapons and technology.
  • Between 2004-08 and 2009-13, India’s share of international arms imports increased from 7% to 14%.
  • Russia was the largest supplier (75.7%) of India’s defence imports, the US a distant second (6.8%).
  • The remaining 25% is made up of the US and Western European countries, particularly France, Britain and Germany.
  • India has purchased weapons worth around $10 billion over the last five years from the US, but without any transfer-of-technology (ToT) clauses.
  • In the last five years, India has been the world’s top arms importer with a 15 per cent global share of imports. Nearly 50 per cent of the capital acquisition budget is spent on imports.

India’s spending on defence equipments:

  • India allocated 1.74 per cent of its GDP towards defence spending in FY16 and is among the top 10 countries in the world in terms of military expenditure.
  • Approximately 40 per cent of the defence budget is allocated for capital acquisitions, which mainly goes towards imports from foreign suppliers.
  • Between 2007-08 and 2014-15, defence budget more-than-doubled from Rs 92,000 crore to Rs 2,22,370 crore, growing at an average rate of 12 per cent per annum.
  • The capital budget also more-than-doubled from Rs 37,461 crore in 2007-08 to Rs 81,965 crore in 2014-15.

Need for indigenous production of defence equipments in India:

India needs to indigenize its weapon platforms, which were being imported, mostly from the erstwhile Soviet Union.

  • India purchase the advanced arsenal/equipments from foreign countries
  • Brahmos is an example of joint collaboration power.
  • It will save foreign exchange, build technological capacity for civilian manufacturing and grow new skills
  • India need to indigenize its weapon platforms, such as the main battle tanks, which were being imported, mostly from the erstwhile Soviet Union.
  • Indigeneous manufacture is always cheaper than imports and leads to a small defence budget, allowing the country to allocate higher budgets for education, health, and improvement of infrastructure.
  • For growth of the domestic manufacturing industry and the creation of a strong defense manufacturing ecosystem.
  • Overall growth of industry will lead to employment generation
  • Lack of indigenous battle tanks for our soldiers who need them to fight an actual enemy
  • Recommendations made by the Kargil committee with regard to equipment acquisition are languishing in the procurement abyss and the Indian Army is still awaiting sufficient artillery pieces.
  • India is constantly in the state of war. India has a simmering conflict from its western border, which spills over into northern sectors.
  • India has intermittent sabre-rattling on its north-eastern front.
  • China’s grasp on the South China Sea jaugular is strengthening, which necessitates a naval defence outlay like never before.
  • Our near border areas are volatile.

Why India is lagging behind in defence production?

If we compare India with that of US or Russia or even China, we are way behind because of:

  • Lack of Funding according to the need/requirement. They allocate more defense budget.
  • Lack of Technology required – They have more skilled persons carrying out the research out of touch from politics.
  • Quality of Quantity problem – US & Russia are arms exporters, hence they have well made strategies for production and exports, whereas we are in transition state.
  • Though the government has emphasised private firms and public-private partnerships, the Indian defence industry continues to be dominated by the public sector.
  • The armed forces are no longer among the coveted career option for the young especially urban Indians
  • The public sector was unable to cope with the increasing operational requirements of our armed forces.
  • Imports contribute 75% of India’s defence equipment needs; the domestic private sector’s share is just 5%
  • Huge lobbying efforts from countries like Israel and Russia sometimes make bureaucrats and commanders to prefer foreign weapons over indigenous ones.
  • The inefficiency of DRDO units/public sector undertakings (PSUs), cumbersome procurement processes, adversarial inter-ministerial relationships, corruption-plagued history, unrealistic technical specifications and lack of accountability.

 

Challenges before India:

 

  • Development of such critical technologies require immensely high end skilled labour’s .
  • Sanctions are another problem, Indian faced sanctions after nuclear explosion and it got serious setbacks.
  • Indian diplomacy is another factor we were attached to Soviet state and largely depended on them for everything, now world has changed and India is moving on.
  • India never encouraged private partnership for such development.
  • DRDO is a public company and it lacks sufficient infrastructure and knowledge for development. That’s why Dussault stepped out of giving HAL a change to build its fighter in India.
  • Slow process in public sector makes development.

 

Government initiatives:

  • This import dependence needs to change with a focus on ‘Make in India’, so that India makes at least 50% of its defence equipment in less than a decade.
  • The Make-in-India initiative of the government is focussed on 25 sectors that include defence manufacturing

 

Conclusion:

India needs to inculcate a better understanding of national security and the components that go into building it. Indigenisation of defence equipment needs to be implemented in a planned manner with prioritization based on strategic requirements as well as availability of local talents. The governments need to create the right conditions for private players.

The ambition to develop an indigenous Indian defence industry has been given increased prominence in the recent past and highlighted in policy statements both from government and opposition parties. It has been emphasized that both the Indian public and private sectors should play a larger role in producing state-of-the-art equipment for the Indian forces.

 

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