Atmanirbharta in Defence Sector: Status, Need, Challenges, and Initiatives, and Way Forward

Context: 

This Article is based on the news “Another major boost to Atmanirbharta in defence: Ministry of Defence signs five major capital acquisition contracts worth Rs 39,125.39 crore”  which was published in the Pib. Recently, the Ministry of Defence signed five major capital acquisition contracts worth Rs 39,125.39 crore marking a significant boost to the Make in India initiative and indigenous capabilities in defence.

Ministry of Defence Signs Five Major Capital Acquisition Contracts Worth Rs 39,125.39 Crore

• Procurement List: 
  • Aero-engines for MiG-29 aircraft (HAL)
  • Close-in Weapon System (CIWS) from L&T.
  • High-Power Radar (HPR) From L&T.
  • BrahMos missiles and Shipborne BrahMos system from BrahMos Aerospace Private Limited (BAPL)

Need for Atmanirbharta in Defence Sector

• National Security at Stake: 

  • India relies on a foreign country for critical defense platforms and equipment. Due to a shortage of components and assemblies, imported equipment poses various maintenance, repair, and overhaul (MRO) challenges in India. This delay could Undermine India’s national security and vital strategic interests. 
    • Example: In 2020, tensions rose between India and China in Galwan Valley.  India was facing a shortage of critical defence equipment.

• Strategic Autonomy:

• • Over-reliance on a single supplier for military hardware can force India to bend to their demands to maintain that supply.  By diversifying its sources through domestic production, India reduces pressure from any one supplier and strengthens its position in negotiations or alliances.
    • For Example: India purchased the S-400 missile system from Russia. The US has threatened sanctions on India for this deal, which puts India in a tough spot, caught between a long-standing partner and a new strategic alignment.

• Global Uncertainties:

• • A global pandemic like Covid-19, the Russia- Ukraine and  Red Sea Crisis, could disrupt supply chains, making it difficult to import essential defence equipment.
    • For Example Nearly 60% of India’s equipment comes from Russia, which is involved in hostilities in Ukraine. Atmanirbharta in defence could help mitigate such risks by developing domestic capabilities for these components.

• Reduce Fiscal Burden: 

  • India is currently the second-largest importer of weapons in the world after Saudi Arabia. 
  • India constantly upgrades its military equipment. Initially, indigenous production may seem expensive. However, over time, the cost of research, development, and manufacturing can be lower than continually importing equipment and spare parts subject to foreign pricing.
    • Example: The Light Combat Aircraft (LCA) Tejas is an indigenous fighter jet developed by India. While the initial development was costly,  the long-term production and maintenance costs are expected to be lower than continuously importing fighter jets.

• Employment Generation:

• • A thriving domestic defence industry creates high-skilled engineering, manufacturing, and research & development jobs. This boosts the economy and creates a skilled workforce for continued innovation.
    • For example setting up a Defence industrial corridor in Uttar Pradesh aims to generate 41,667 employment opportunities.

• Combat Capability:

• • Atmanirbharta in defence fosters innovation in designing and developing military equipment tailored explicitly to India’s unique geographical and security needs. This can lead to a more effective and modern fighting force.
    • Example, the DRDO is actively developing indigenous defence technologies like the Akash surface-to-air missile system to meet India’s specific air defence requirements.

Challenges in Achieving Atmanirbharta in Defence Sector

Here are the some major challenges in achieving atmanirbharta in defence sector;

• Technological Gap: 

  • Developed nations possess a considerable lead in high-end technologies like advanced aircraft, stealth materials, and next-generation weaponry. Bridging this gap requires substantial Research & Development (R&D) investment and nurturing a robust domestic innovation ecosystem.
    • For Example: The gross domestic expenditure on research (GERD) has been stagnant at 0.7 per cent of the GDP for years. India has one of the lowest GERD/GDP ratios among the BRICS nations.

• Bureaucracy and Efficiency Concerns: 

  • India’s defence procurement process is notorious for its slow and bureaucratic nature. Delays in Defense projects impacting production timelines and budgets.
    • For Example: The Submarine Project P-75l has reached only the Request for Proposal stage in 2021 despite being in the pipeline for the greater part of the last two decades.

• Industrial Ecosystem Woes:

  • A strong domestic defence industry hinges on a well-developed ecosystem of suppliers, manufacturers, and skilled workers. Encouraging private sector participation, fostering innovation among startups (like IDEX), and building a skilled workforce are crucial steps.
    • According to the Ministry of Defence, 333 private companies have been issued a total of 539 industrial licenses. Of these, 110 companies have reported commencement of production only

• Geopolitical Considerations: 

  • Foreign suppliers may be hesitant to transfer sensitive technologies to Indian companies, hindering India’s ability to achieve complete self-reliance.
    • Foreign manufacturers are reluctant to act as India’s defence-procurement partner due to fear of losing control of their intellectual property
    • Despite India–UK collaboration regarding defence capabilities British companies continue to view India as a challenging market due to its protectionist defence-industrial policies.

• Discouraging Regulatory Regime: 

  • A domestic or foreign company wishing to do business in the Indian aerospace and defence industry must comply with often conflicting policies of Defence Procurement Procedure (including the Offset Policy), FDI, Industrial Licensing, Foreign Trade (Export/ Import) and Taxation.
    • For Example: India also has strict requirements regarding the level of indigenous content that must be present in defence manufacturing: in the ‘short term’, which is not defined, 50% or more of the parts and materials used in weapons or equipment must be domestically sourced. 

• Limited Fiscal Space: 

• • Developing indigenous defence equipment can be expensive, especially during the initial stages. India needs to find a balance between affordability and technological advancement. In some cases, importing certain equipment in the short term might be cheaper. 
    • For Example: With a defence budget of INR 5.94 trillion (USD73.8 billion) for 2023, the majority of this, or roughly 53%, is used for pensions and people, which reduces the amount available for modernising and purchasing defensive equipment.

• Lacking Convergence in Manufacturing and Need for Defence Forces: 

  • Manufacturers and defence forces are at odds.
    • Example: The Navy rejected the LCA Tejas as its present form does not meet the naval qualitative requirements (QRs) to be a carrier-based aircraft.

Way Forward: Towards Atmanirbharta in Defence Sector

• Focus on Research and Development:

  • Defense start-ups serve as a driver of innovation and have the potential to become a key part of India’s renewed push toward self-reliance in the defence sector. Start-ups can play an increasing role in equipping the armed forces with niche capabilities.

• Joint Ventures and Technology transfer:

  • Strategic partnerships with foreign companies can be beneficial.  Joint ventures can facilitate technology transfer and knowledge sharing, allowing India to build its own capabilities over time.

• Autonomy for Defence PSEs and  PSUs: 

  • Greater operational and financial autonomy can help state-owned enterprises increase profits, productivity and employment.

• Reform in Defence Procurement Policies: 

  • Streamlining procurement procedures, reducing bureaucracy, and ensuring faster decision-making will make domestic options more attractive and expedite acquisition processes.

• Emphasis on Defence Export:

  • A strong domestic defence industry can help India to become an export powerhouse. Developing a robust export strategy will generate revenue and encourage innovation to compete in the global market.  
  • For Example, India needs to establish a framework similar to the US’s Foreign Military Sales (FMS) program to facilitate a smoother international defence deal.

• Shekatkar Committee:  

  • This committee advocated increasing the retirement age for specific personnel. This could free up resources for the government to invest in other critical areas within the defence sector, like R&D and infrastructure development.

• Vijay Kelkar Committee:  

• • Their recommendation to involve India’s leading private companies in defence production is crucial.  Leveraging their expertise and manufacturing capabilities will be vital for Atmanirbharta in in defence sector.

Conclusion

The Defence Minister emphasised the need for atmanirbharta in defence for the country not an option but a necessity in the fast-changing global scenario.