Indigenous Defense Manufacturing

Indigenous defense manufacturing has seen a considerable progress in India in the recent times.

  • As per the Stockholm International Peace Research Institute (SIPRI), in the period between 2009-13 and 2014-18, Indian defence imports fell even as exports increased.
  • According to government of India data for the financial year 2018-19, the three armed services for their combined capital and revenue expenditures sourced 54% of their defence equipment from Indian industry.
  • In the last two fiscal years, 2017-18 and 2018-19, exports have witnessed a surge from ₹7,500 crore to ₹11,000 crore, representing a 40% increase in exports.
  • Reasons for this change – Thrust on ‘Make in India’; absence of capabilities/delays in supplying equipment by vendors resulting in the cancellation/diminution of existing contracts by the Indian government. Such cancellation eventually leads to decrease in import of defence equipment.
  • Steps taken to streamline defence procurement – Formulation of India’s Defence Procurement Procedure (DPP) – it lays out the terms, regulations and requirements for defence acquisitions; creation of a new procurement category in the revised DPP of 2016 dubbed ‘Buy Indian Indigenously Designed, Developed and Manufactured’ (IDDM);  introduction of provisions in the DPP that make private industry production agencies and partners for technology transfers. 
  • Among arms producers, India has four companies among the top 100 biggest arms producers of the world.
  • Challenges SMEs face in defence manufacturing – privilege Defence Public Sector Units (DPSUs) enjoy over the private sector; not enough incentives in terms of technology and finance. 
  • Why exports have risen – delisting or removal of several products that were restricted from exports; dispensation of the erstwhile No Objection Certificate (NOC) requirement under the DPP restricting exports of aerospace products.
  • Way ahead – Indian defence exports, while showing a promising upward trend, still remain non competitive globally. It is likely that Indian defence exports will take several years before they are considered attractive by external buyers. But green shoots are emerging in the sector.


Practice Questions:

What steps have been taken by the government of India to streamline the process of defense procurement in India? – 150 words

The defense manufacturing sector in India has a huge export potential. Do you agree? Highlight the advantages of the effective utilization of India’s defense export potential. – 250 words.

Source: The Hindu

Categories: POINT IAS

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