Towards indigenous defence ecosystem

India has the third largest army, the fourth largest air force and the seventh largest navy in the world. It is among the top 10 countries in terms of military expenditure and world’s largest arms importer.

It allocates about 2% of its GDP towards defence spending, of which 40% is allocated to capital acquisitions and only about 30% of equipment is manufactured domestically, mainly by the public sector undertakings. Even when defence products are manufactured domestically, there is a large import component which is an attractive pro-position for its defence partners.

India has established long term partnerships with many countries to provide arms, vessels, fighter jets etc, that help counter the threats present in the country. Import of defence technologies and products costs billions of dollars every year. Hence, it’s extremely important for India to create its own ecosystem rather than depending on the international partners for its defence needs.

With ‘Make in India’ in the defence segment creating enough buzz, this is a call that the country can least afford to ignore. But we need to have the right vision, long term approach and enough patience to transform the country into a defence powerhouse. We are among the top spenders when it comes to defence, majority of which is dominated by recruitment and procurement.

In the next decade, India will spend at least $100 billion on defence procurement. Manufacturing within will help us fund the industry within India instead of boosting other nations’ GDP. The defence industry’s import-export ratio is inferior to countries with a much smaller defence industrial base. The ‘Make in India’ policy for the defence sector aims to reverse the current imbalance between the import of defence equipment and its indigenous manufacturing.

Therefore, achieving self-reliance and reducing dependence in defence is a necessity today ra-ther than a choice, both for stra-tegic as well as for economic reasons. The requirement for domestic production of defence equ-ipment is more than for any other sector because it will not only save precious foreign exchange but will address the nation’s security concerns. The ‘Make in India’ policy aims at facilitating inv-estments and fostering innovations in manufacturing sector.

Access to the state-of-the art technology has always been a problem and has emerged as a roadblock to foster defence manufacturing. There have been a few instances of technology transfer, but it is limited only to older or outdated technologies. Therefore, we are required to keep pace with the innovation happening across the globe and need to start providing a stimulus to the companies in the defence electronics domain.

Prime Minister Narendra Modi himself accepted defence manufacturing as the biggest job spinner. There is no second thought about the claim, but are we ready to deliver the talent supply need? Probably not.

Dearth of talent continues to weigh on India’s hope to emerge as a defence manufacturing powerhouse. Hence, it is quite critical for the nation to establish a strong industry-academia cult-ure around the defence segment in order to address the nation’s skill gap by early next decade.

Private players

The government should involve private players and multinationals in the initiatives to make the would-be engineers future-ready for the complex requirements in the defence space. Moreover, it should create a great professional and commercial environment for the engineers to cross-pollinate knowledge between countries.

Military industrial complexes are important from an economic standpoint of reducing the cost of acquisition and maintenance for the forces. The electronics sector has been immensely benefited by setting up multiple manufacturing clusters across the nation and a similar approach needs to be implemented for the defence sector.

Karnataka and Hyderabad have been on the forefront in terms of aerospace and defence (A&D)-focused Special Economic Zones that have already been set up, this again needs to be replicated across states.

Such complexes can be considered as instruments of foreign policy and also provide leverage as negotiable levers for military imports and exports. Such initiatives help build local intellectual property in critical defence areas and support local defence manufacturers in building export capabilities. Though there are few such defence clusters, there is a need to set up su-ch complexes across the nation to stimulate manufacturing and innovation in the A&D space.

The trick will be to ensure military preparedness while indigenous capability develops. The most difficult part of this balance would be ensuring a successful interlocking set of relationships between the military, private sector, universities, and the political leadership.

(The writer is President, India Electronics and Semiconductor Association)