Indian industries, especially the defence sector has grown leaps and bounds in the recent past, as country’s arms exports have grown nearly six times since 2014 i.e. from Rs. 1520 crore to a whopping Rs. 8434 crores. Ever since PM Modi launched the ‘Make in India’ initative in 2014, private industry players have displayed a newfound zeal and optimism to become vectors in erecting a self-reliant culture in Defence manufacturing. The government too went to lengths and relaxed norms, introduced well-thought measures, created a better ecosystem and breathing space for defence indigeneity in the country, all of which has resulted in reduced dependence of India on foreign-sourced arms and armaments.
In its efforts towards further bolstering the domestic defence ecosystem, the Defence Acquisition Council (DAC) has recently amended Defence Acquisition Procedure (DAP) 2020 for all modernisation requirements of the Defence Services and Indian Coast Guard indigenously. According to this, the Indian defence forces will now have to source all their modernization requirements from the domestic defence sector, with the outright import of weapons and platforms being resorted to only as an exception with the ‘specific approval’ of the Defence Minister and the DAC. Other amendments include measures to reduce the ‘financial burden’ on the Indian Defence industry while maintaining financial safeguards. The requirement of IPBGs (integrity pact bank guarantees) has been dispensed with, for instance, and EMD (earnest money deposit) will be taken as bid security for all acquisition cases costing over Rs 100 crore. Besides, the total order quantity will be split between shortlisted vendors, wherever viable.
The move will largely encourage wider participation and broad base the indigenous defence manufacturing sector in the country and may help the government meet its defence export target of Rs 35,000 crore by 2025. To boost defence exports, the defence ministry has also been eyeing various contracts with different countries. These include the selling of two Dornier military aircraft to the state of Sri Lanka and Light Combat Aircraft (LCA) Tejas to Malaysia in a deal expected to be around $900. Both the aircrafts have been manufactured by the state-owned Hindustan Aeronautics Limited (HAL). India had also signed a $375 million deal to export the BrahMos supersonic cruise missile to the Philippines in February this year. In December 2020, the Cabinet even gave a green signal to the sale of Akash missile systems to friendly foreign countries. MoD too has been signing defence deals with DRDO, BEL, HAL, Bharat Dynamics Ltd, etc. to acquire high-tech advanced multi-functional planes, drones, rifles, tanks to increase both country’s defence capabilities and foreign sellouts.
In what demonstrates India’s sharpened focus on getting a toehold in foreign defence markets, the government granted close to a thousand export authorisations last year, which was around four times the number approved five years ago. The approvals too have been given with speed and discipline. This resulted in attributing the nearly four-fold increase to the government’s export-friendly policies to tap new markets. Other big resolves by the government include revision of the 2016 Defence Procurement Policy into the Defence Acquisition Procedure 2020, giving ‘Buy Indigenously Designed, Developed and Manufactured’ category the top most priority for procurement of capital equipment,enhancing foreign direct investment (FDI) in the defence sector, new norms for Rationalisation of the development process, renewed thrust on indigenisation of weapons and systems, and rescinding a section of the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list that will further the growth figures of defence exports.
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