July 25, 2024

Impact of India’s Defence Indigenization on Global Political Dynamics

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By: Sourishree Ghosh, Research Analyst, GSDN

Atmanirbhar Bharat: source Internet

India has made significant efforts towards modernisation of its armed forces. One of the positive aspects is that the defence modernisation and innovation is taking place through the indigenization efforts in the defence sector by the government. These efforts are integral for securing India’s national interest in the turbulent global politics.  India’s defence indigenization will play a pivotal role in the fortification of India’s national security and self-reliance. 

The Army Design Bureau has been spearheading the Army’s ‘Make in India’ initiative. The idea is to develop a body based on the lines of the American DARPA (Defense Advanced Research Projects Agency) in India for the bolstering and development of cutting-edge technologies and inducting platforms and systems into the military. The commitment of the Defence Minister to earmark three fourths of the defence capital outlay for 2023-24 for domestic defence manufacturers is a right step towards augmenting India’s defence capabilities. The Ministry of Defence has set a target of achieving a turnover of INR 1.75 Lakh Cr in aerospace and defence Manufacturing by 2025, which includes exports of INR 35,000 Cr. Till Apr 2023, a total of 606 Industrial Licences have been issued to 369 companies operating in Defence Sector. This landmark event is crucial as ASEAN centrality is the most recurring feature for a free, open and inclusive Indo-Pacific region. 

India’s Atmanirbhar efforts in India’s Defence Sector

The enhancement of the US-India Comprehensive Global Strategic Partnership during Prime Minister Narendra Modi’s state visit to the USA last year, a MoU was signed between Hindustan Aeronautics Limited (HAL) and USA’s GE Aerospace for producing fighter jet engines for the IAF. Recently, India’s Cabinet Committee on Security approved a project for designing and developing a fifth-generation stealth fighter jet, the Advanced Medium Combat Aircraft (AMCA). This has also augmented India’s aerospace power. The project would be undertaken by India’s Defence Research and Development Organisation (DRDO) in partnership with various private and public sector agencies for building five prototypes in the next five years.  These Indigenisation efforts are aimed at strengthening India’s indigenous capabilities and its domestic-military industrial complex which has seen a rise in the past few years. Last year in November 2023, the delivery of the 83 Light Combat Aircraft (LCA) Mk 1A Tejas for the IAF was placed with Hindustan Aeronautics Limited in addition to the induction of indigenously designed and developed Light Combat Helicopters (LCH) by the Indian Army and the Indian Air Force.

Strategic Implications in India’s Neighbourhood

The indigenization efforts also have strategic importance for the possible two-war front in our neighbourhood. This would be a crucial bulwark against China and Pakistan and also provide an effective deterrent against the possible two-front war along India’s borders. Russia contributed to around 49.3 % of India’s arms between 2016 and 2020, which may also come under the growing pressure from China with regard to its critical arms supply to India. One of the most enterprising part of their defence ties is the joint defence manufacturing projects examples include the manufacture of AK-203 assault rifles and the Kalashnikov series of manufacturing small arms. The close partnership of India with its ASEAN partners would upgrade India’s stature as a reliable defence partner and also compete with the global arms suppliers. This would also strengthen deterrence and regional power balance with the friendly neighbours. 

China has rapidly developed and modernised its military and war-fighting capability which has created wide asymmetry in the balance of power between the Indian and Chinese militaries along the LAC. In 2016, the government developed the Indigenously Designed Developed and Manufactured (IDDM) category under the overall policy of defence indigenisation and Make in India initiative. The Positive Indigenisation lists serve as a resolve of the user for not falling back upon the imports of the items listed therein. The government has also enhanced allocation (68% of capital acquisition budget) for acquisition from Indian companies and 25% of that for acquisition from the private sector. The two Defence Industrial Corridors (DICs) in Uttar Pradesh and Tamil Nadu aim to attract investment of about Rs 10,000 crore each are being set up. The Kerala Industrial Infrastructure Development Corporation (KINFRA) has set up a 60-acre defence park in Ottapalam wherein about 50 defence-related firms and startups are located. The surveillance drones, counter-drone systems, 24*7 alert systems in North Kashmir and the Chinar Corps based in Srinagar point towards the fact that technology and surveillance and battlefield transparency has been developed with the help of indigenous technology. These equipment enhance the strategic influence in the region through deployments in the LOC (Line of Control) as well as the McMahon line. Moreover, around 30% of DRDO’s Research & Development funds are being used for the Strategic Force Command’s requirements. India has also designed and developed 75 cutting edge Artificial Intelligence-based military products which have been exported to many countries. The country has also demonstrated indigenous capabilities in the designing and building of long-range surveillance systems and a wide range of cutting edge missiles, artillery rockets and underwater weapons.    

Increased Role and Participation of the Private Sector

Another trend in the indigenization defence efforts is the growing participation of the private sectors. An example includes the warship development programme that includes large survey ships and shallow water anti-submarine warfare crafts. Another example is the Akash Missile Programme. It is also an era of innovation that has begun in the Indian military industrial landscape, an idea that was central to the theme of Def Expo 2022 at Gandhinagar in October. A classic example is the world-class BrahMos missiles (currently imported by Philippines ) and the flagship Light Combat Aircraft Tejas and the aircraft carrier INS Vikrant have also generated a lot of interest worldwide.   Another trend to be noted is the Atmanirbharta in defence, unlike the earlier self-reliance push through Public Sector Units, is also focussed on tapping the innovation and capabilities of private enterprises, startups and foreign partners. An example include the Aero India 2023 held earlier this month in Bangalore was reported to have firmed up 266 partnerships, 201 MOUs, 53 major announcements and a dozen transfer of technologies. The mega-event is a good occasion for reflection on Project Atmanirbharta in Defence (Project AID). Secondly, the defence startups can play a crucial role in augmenting India’s Atmanirbhar efforts. A right step in this direction was the “India-Indonesia Defence Industry Exhibition-cum-Seminar”, held in Jakarta wherein the representatives of 36 Indian defence companies met with their Indonesian counterparts. 

India’s Defence Diplomacy Card: The Geopolitical Underpinning of India’s Defence Indigenization Efforts

India has also seen a high demand for high-tech defence and military equipment. According to the Stockholm International Peace Research Institute (SIPRI), India’s weapons import declined by 21% between 2012-16 and 2017-21. This has also led to the emergence of a military-industrial complex in India. The major economies across the world have developed military-industrial architecture to the defence production industry which has resulted in a win-win situation. In 2020-21, Indian weapons makers exported worth Rs 13,000 crore worth of weapons and systems and around 70% of it was from private companies. Recently, Captain Rajprased from the Army Design Bureau (ADB) has been handpicked and placed at the IIT Delhi for setting up a research lab for the furthering of research and development of military.

India had transformed rapidly from a  top importer of arms to an exporter of defence products worth Rs 16,000 crore to 89+ nations, thanks to India’s Military Industrial Complex (MIC) has come a long way. The DRDO website also features India’s indigenous defence weapon systems namely BrahMos, Tejas and C4ISR instruments such as Rebath, Lakshya etc, which would significantly impact India’s global security dynamics. By exporting the defence items which meet the international standards, India has been leveraging its domestic defence products which has its own set of political, economic and security benefits. India has been reportedly spending Rs 1.5 lakh crore annually on average until 2030 with the aim of upgrading its armed forces. For the financial year 2023-24, India’s defence budget is set at INR 5.93 trillion. The Indian defence industry is still dominated by the public sector. The 2022-23 budget had specified that 68% of capital procurement would be sourced from the domestic industry. 

India has less than 2% in its defence FY25 budget, much less compared to China and the US. However, it would not be feasible for India to spend on leaps and bounds on military due to development considerations and structure of the political and economic systems. India has also become one of the largest importers of arms (accounting for 11% of global arms sales) while exposing India’s vulnerability to supply chains.  India’s indigenously developed two frontline destroyers in the Indian Navy- INS Kolkata and INS Delhi. An Indian version of the Bayraktar TB-2 has been built by an Indian startup.  Analysts also predict that the industry-led design and development could soon hopefully deliver us an indigenous, light weight tank, the multi-role helicopter, low-orbit satellites and hypersonic glide vehicles.

Defence diplomacy is an excellent mechanism for forging defence cooperation. India has been diplomatically approaching the US, UK, Israel, Australia for various areas of defence cooperation. It is also one of the crucial components of India’s Neighbourhood, India’s SAGAR Doctrine and Act East Policy for defence cooperation. The diversification of India’s defence agreement has also strengthened her options with regard to defence equipment and technologies. For promotion of India’s exports, Exim bank financing and the MEA has played a crucial role in augmenting defence exports. In recent years, India and West Asia have been expanding their military and defence relationships. India has also recently supplied the Brahmos Cruise missile to the Philippines. Both nations have also expressed keen interests in augmenting the defence ties through the opening of an Indian defence attaché and also challenging China’s presence in Philippines’ Exclusive Economic Zones (EEZ). Another classic example is the India-Vietnam Defense Partnership towards 2030. India also inaugurated the regional office of the HAL in Kuala Lumpur. India’s close defence cooperation with the Southeast Asian for maintaining a regional power equilibrium in the maritime domain of the Indian Ocean. It is one of the potential export markets for India.

The indigenization of the defence sector would decrease India’s dependence on imports. India is still currently one of the largest arms importer with Russia being the largest supplier. India has also been playing a crucial role as an arms exporter to around 85 countries. This is due to the major initiatives undertaken by the government including the integration of the startups and the MSMEs into the supply chain of defence products, the Fifth Positive Indigenisation List (PIL) among others have showcased the potential capabilities of India’s defence industry. Therefore, the self-reliance aspect of ‘Make in India’ has truly been transforming into ‘Make for the World’.

Policy Suggestion: Conclusion

The Government has taken various policy initiatives which include promotion of self-reliance and defence manufacturing and technology in the country which includes priority to the procurement of capital items of Buy Indian (IDDM) category from Domestic sources under Defence Acquisition Procedure, simplification of industrial licensing, launch of mission DefSpace, launch of Innovation for Defence Excellence and establishment of two defence industrial corridors in Uttar Pradesh and Tamil Nadu for attracting investments in the defence manufacturing ecosystem in the country. This has allowed greater participation of the private sector in the Indian Industrial ecosystem. this has borne positive results given the expenditure on defence procurement from foreign affairs has reduced from 46% to 36% in the last four years i.e. from 2018-19 to 2021-22. Lastly, the government has also been encouraging Startups and MSMEs under the ‘Dare to Dream’ Scheme.

The way forward is doing the capability gap survey and chart out a precise plan for vendor building. There is a need for a robust indigenous defence manufacturing and export capability which would save the country from any disruption in case of conflicts. There are different issues which are faced by India’s defence industrial base. One of them is the lack of private sector participation in the defence production. The reasons include the complex licensing and regulatory procedures which have limited their access to the sensitive technology. There is a need for fostering partnerships for encouraging the Indian defence companies and foreign companies for transferring technology and expertise. The weak intellectual property rights and the laws need to be addressed through fixing the legal loopholes. The foreign companies have expressed their concerns on the transfer of intellectual property rights to the Indian partners. India also needs the imports of high-end defence technologies with the aim of achieving the exports of sensitive defence technology for realisation of its Atmanirbhar dreams. More opportunities in the niche manufacturing collaboration such as direct sales, joint research and development and training in cyber security. The areas of defence production and manufacturing should be expanded.

The defence bureaucracy ought to implement the much-needed reforms in India’s defence sector. There is also a need for close collaboration with the academia (institutes of national importance) with the government bodies for better research and development in the building of such advanced defence technologies. These developments would help India play a bigger role in the international security dynamics and global dynamics and also emerge as a net security provider. These reforms are critical for strengthening India’s defence indigenization efforts. These would also upend India as a net security provider in the region. An upgrade in the defence ties between India and its close security partners would go a long way in augmenting India’s defence indigenization efforts. India’s defence indigenization policy will help India achieve its global geostrategic ambitions. It has been rightly pointed out that India’s diplomacy reshaping the global dynamics from borders to boardrooms.  


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