Internet was a US military invention which went on to change the way humans live. Defence sector across the developed as well as developing countries spends a lot on R&D as well as in purchase, manufacturing and maintenance of traditional as well as cutting edge equipment.
According to a report by SIPRI (as of 25 April, 2022), India stands as the third largest military spender in the world. India has been endorsing the idea of building a strong indigenous defence manufacturing capacity and seeking investments from both foreign and domestic companies alike in the sector. Both the developments hint towards the unprecedented churn in the Indian defence ecosystem, which is giving a much-needed impetus to India’s fast-evolving defence economy.
India is rapidly modernising its defence capabilities to keep the Armed Forces in a state of readiness. More than 93 military modernization projects worth around Rs 1.43 Lakh Crore are currently in progress. In recent years, India has taken several ground breaking steps like creating defence planning committee, introduction of Defence Acquisition Procedure (DAP) 2020, Technology Development Fund scheme, appointment of CDS to bring in greater synergy with Ministry of Defence, long term modernization plan by factoring the emerging or futuristic security situations, Army Design bureau, reorganization of Army headquarters, setting up of defence corridors in Uttar Pradesh and Tamil Nadu, Military Technology Cooperation, increased foreign collborations, among others.
The ‘Make in India’ initiative for defence is also being carried out with 3 different treatments – Make I (90% government funded, with vendor), Make II (prototype development or upgradation of of equipment/system/platform, with zero government funding), and Make III (joining hands with foreign firms for production on Indian soil). Under the ‘Make in India’ program indigenous design, development and manufacture of defence equipments are being vigorously encouraged in the country, thereby reducing import of defence equipment.
The defence budget for the financial year 2022-23 is Rs 5,25,166 crore, an increase of Rs 46,970 crores or 9% over last year’s Rs 4,78,196 crore. As per the budget, Rs 1.52 lakh crore is being spent in capital expenditure, which relates to modernisation and infrastructure development of the Armed Forces only. Out of this 1.52 lakh crore, 68% of the amount is being spent on indigenous manufacturing to encourage investments and attract fresh capacity creation. An increase of more than 10% in back-to-back capital budgets expresses the continued push towards the modernisation of the armed forces. 25% of defence R&D budget is earmarked for private industries, startups and academia. Private industry is being encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through special purpose vehicle model.
Ease of doing business is helping indigenous defence production too. An independent nodal umbrella body created for meeting wide ranging testing and certification requirements of defence systems and platforms, is helping domestic industry through faster processes and cost-efficiency. Two positive indigenisation lists comprising 101 and 108 items were promulgated by Department of Military Affairs (DMA) under Ministry of Defence in recent months. In addition, to minimize import by DPSUs, Department of Defence Production has also notified a positive indigenisation list of things, in which 2500 items are already indigenized. Government is also considering adding more items for indigenous production. Timeline to add more items is reviewed continuously based on the requirements of Armed Forces as well as capability of domestic industry. Despite all these revolutionary efforts, India still needs to introduce many more reforms to rise to the fast changing security situations. Schemes like ‘Agnipath’ seem to be a product of the same restructuring thought.
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