Rs 3.5 lakh cr worth defence projects were signed as part of the ‘Make in India’ mission; but none of the major ones ever took off in the last 6 years

It was quite a splash in favour of self-reliance. Union minister for defence Rajnath Singh has unveiled a spread of initiatives that he said will reduce India’s arms import bill, and boost our self-reliance. Launching the ‘Atma-Nirbharta Week’, the minister announced that 101 items over 5 years would be banned in favour of domestic production. The negative list reserved for local manufacture will have not only small arms, but a relatively sophisticated range from light military aircraft, to even long range cruise missiles.

This policy path can only be described as momentous. India imports 65 per cent of its defence needs. Independent arms think tank, the Stockholm International Peace Research Institute (SIPRI), estimates India’s military spend for 2019 at $71.1 billion. We are behind top-spending US ($732 billion) and China’s $261 billion, but still ahead of Russia ($65.1 billion) and Saudi Arabia ($61.9 billion). The SIPRI figure is disputed as India’s declared defence budget estimates for 2020-21 is $62.85 billion, or about Rs 4.9 lakh crore. India has, however, remained the world’s second largest arms importer for the 2015-19 period after Saudi Arabia, SIPRI’s March 2020 report said.

A ‘Make-In-India’ Repeat?

The Defence Minister’s ‘Atmanirbharta’ statement has not been received with the wild applause it might have deserved. The reason for the scepticism: the same NDA government had in its first term unveiled a similar exercise called ‘Make In India’. Everyone remembers it. Self-reliance in defence was one of its declared aims, but much of the programme has remained on paper. 

The ‘Make in India’ website, pitching for investments says, “The opening of the Defence sector for private sector participation will help foreign Original Equipment Manufacturers (OEMs) to enter into strategic partnerships with Indian companies. Besides helping in building domestic capabilities, it will also bolster exports in the long term.” The government site also claims: “Since 2014, the Ministry of Defence has signed more than 180 contracts with the Indian Industry, as of December 2019. These contracts were valued over $25.8 Bn approximately.” It is true that projects worth a humungous Rs 3.5 lakh crore were signed as part of the ‘Make in India’ mission; but none of the major ones ranging from new generation stealth submarines and mine-sweepers to fighter jets ever took off in the last 6 years. 

The only one that appears to be close to fruition is for the manufacture of AK-203 assault rifles being produced at the Korwa Ordinance Factory, in UP in joint venture with Russia. Some of the major contracts stuck include the Rs 8,000 crore Light Utility Helicopter project aimed at replacing the Cheetah/Chetak fleet struggling at the technical evaluation stage, though the contract with Russia was signed in December 2015. Another worth Rs 32,000 crore for the production of 12 minesweepers between Goa Shipyard and Kangnam Shipyard of South Korea was scrapped in December 2018.

Local R&D Has Failed

We have a large government-run defence R&D and production establishment, but considering India imports 65 per cent of its needs and accounts for 9.2 per cent of the word’s arms imports, there is obvious non-performance. The Defence Research and Development Organization (DRDO), Rahul Bedi in The Wire points out, has a network of 52 advanced laboratories, manned by 5,000 military scientists and engineers, and a support staff of around 25,000. And, despite a galloping budget that has shot up from Rs 13,501 crore in 2016-17, to Rs 19,021 crore in 2019-20, it has not much to show.

Then there is the Ordinance Factory Board (OFB) with a fiefdom of 41 establishments and a one lakh workforce, and 9 defence PSUs including Hindustan Aeronautics Ltd. Such a large infrastructure of R&D and production units should have achieved self-sufficiency quite a while ago; but as Bedi points out in his piece, even 80 per cent of the special high altitude winter clothing used by troops on the Siachen Glacier and on the Chinese border is imported.

Ajai Shukla, another well-known defence commentator, says the problem is “India allocates by far the highest percentage of its defence budget on personnel costs, with a hefty 59 per cent going on salaries and pensions. Even the US and the UK, which pay their soldiers relatively lavishly, spend only 38 per cent and 30.6 per cent on personnel costs. Thus, while China and the UK spend 41 and 42 per cent of their defence budgets on modernisation, and even Pakistan spends a healthy 37 per cent, India can spare no more than 25 per cent on equipment modernisation, ie. capital expenditure.

Military hardware and defence systems need constant upgrades. These involve a huge and focused investment year after year. If the new ‘Atmanirbharta’ mantra does not rise to the occasion, it will go the ‘Make in India’ way. Former army chief General (Retd) V P Malik, speaking at a conclave in Chandigarh, last December, plainly said the armed forces are always blamed for supporting imports, but they have no other alternative.