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Thursday, May 9, 2024

Shot by shot, Indian military is getting atmanirbhar (Self Reliance)-ET

 


It's not the high-tech weapons such as the M-1 Abrams tank and F-16 fighter jets that can help Ukraine win the war against Russia. It's the humble artillery shells. Russia is currently firing around 10,000 shells a day, compared to just 2,000 a day from the Ukrainian side. Russia is producing about 250,000 artillery munitions per month, or about 3 million a year, while the US and Europe have the capacity to generate only about 1.2 million munitions annually to send to Ukraine, as per a recent CNN report.

Russia and Ukraine are now fighting a "production war", a senior NATO official has told CNN. Because the war is likely to be won with artillery shells instead of high-tech weapons.

India had foreseen a scenario like this a few years ago when it decided to indigenise its defence production at a large scale. Now it is close to achieving self-reliance in many items. In a significant feat, the army is aiming to stop import of all ammunition from the next financial year as the domestic industry has ramped up its capacity to meet all demands and is even poised to bag a chunk of the global market, a senior procurement officer has said.

How India is achieving defence atmanirbharta


Ammunition is not the only stuff India will soon start manufacturing entirely domestically. It is now producing even sophisticated weapons systems. India has so far indigenised 2,920 defence items out of 4,666 listed items, Director (DIP), Department of Defence Production, Amit Satija, said three months ago. These items include assemblies, sub-assemblies, raw materials, critical spares and components. Air Chief Marshal VR Chaudhari has said that the IAF has indigenised more than 60,000 components in the last two to three years.

The indigenisation of defence items was part of Prime Minister Narendra Modi's Make in India ambitious programme. In 2015, the government issued a record 56 licences, permitting players such as the Mahindras, Tatas and Pipavav to set up production units. In comparison, the previous government cleared just 47 projects in three years.

The previous United Progressive Alliance government had introduced an 'offsets policy' that required overseas companies winning Indian military contracts to invest at least 30 per cent of the contract value in the local defence or aerospace industry. However, most projects were stuck in permissions and other processes. In 2017, the government revised the policy to allow foreign companies more flexibility in choosing local partners and allocating work. The changes helped unlock $3.5 billion in foreign investments that were stuck due to the tough offset policy clauses.

Following its policy of Atmanirbhar Bharat, the government took the historic decision to convert the Ordnance Factory Board (OFB), a subordinate office of the Ministry of Defence, into seven new 100% government-owned corporate entities with professional management: Advanced Weapons and Equipment India Limited, Troop Comforts Ltd, Avani Armoured Vehicles, Munitions India Limited, India Optel Limited, Gliders India Limited, Yantra India Limited. Earlier, the 41 ordnance factories in the country came under the OFB and many were in losses and performing poorly. All of these seven new defence companies improved their performances and six of them reported provisional profits in their first six months of business.

In 2020, the Ministry of Defence (MoD) prepared a list of 101 items to be produced indigenously for which the imports would be banned. Last year, the ministry issued the fifth such positive indigenisation list of 98 military hardware. Earlier, four lists contained a total of 411 military items. Separately, the Department of Defence Production notified four positive indigenisation lists consisting of 4,666 items.

MSMEs and startups emerging as key partners

The Department of Defence is moving fast and steadily towards the indigenisation goal, with 40 to 50 licences being issued every year in defence production. Not just big private groups such as Tata and Adani are involved in defence production but the government has been encouraging MSMEs and startups too.

Many small players in India are designing and developing products and solutions for the defence sector. There has been a sharp growth in MSMEs and startups participating in this segment. As of December 2023, there were about 433 startups, MSMEs and individual innovators engaged in defence production in India, according to the Department of Defence Production and Ministry of Defence. The government has signed 302 contracts with them for various projects.

In 2018, Prime Minister Narendra Modi launched the Innovations for Defence Excellence (iDEX) framework to support innovation and create pathways for technology adoption. It has multiple programmes to identify and support startups with unique innovations.

The government aims to nearly triple India's total annual defence production to Rs 3 lakh crore by 2028-29. The target for defence exports is more than double at Rs 50,000 crore as against Rs 21,083 crore at present. The target for 2024-25 is Rs 1,75,000 crore worth of total annual defence production, which would include exports worth Rs 35,000 crore.

According to a report by Jefferies, with an estimated domestic defence opportunity ranging between USD 100-120 billion over the next 5-6 years, the sector anticipates a visible 13 per cent industry Compound Annual Growth Rate (CAGR) from FY23 to FY30.Producing all of its ammunition domestically from the next financial year is a significant step for India's ambitious defence production programme. A steady pace of growth can build a military-industrial complex in India with its own Raytheons and Lockheed Martins.


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