Defence Production and Import Dependency in India
The indigenous production of Defence equipments in the country comes under the purview of the Department of Defence Production under Defence Ministry. India inherited the Ordnance Factories (OF) Organization from British, now known as Ordinance Factories Board. There are 41 Indian Ordinance Factories, placed under a Ordinance Factories Board and eight Defence Sector PSUs viz. Hindustan Aeronautics Ltd. (HA), Bharat Electronics Ltd (BEL), Bharat Earthmovers Ltd (BEML), Bharat Dynamics Ltd (BDL), Mazgaon Dock Ltd (MDL), Goa Shipyard Ltd (GSL), Garden Reach Shipbuilders & Engineers Ltd (GRSE) and Mishra Dhatu Nigam Limited (Midhani). Further, there is a handful of private participants in the industry including Tata, Mahindra, Ashok Leyland etc.
A little introduction about the same is given below:
Public Sector
- HAL designs, develops, manufactures and repairs the aircrafts, helicopters, engines, aircraft accessories etc.
- BEL produces electronic equipments for army and paramilitary forces.
- BEML produces heavy vehicles for Defence and provides re-engineering solutions.
- MDL manufactures submarines, missiles, boats, destroyers, frigates and corvettes.
- GRSE builds and repairs warships
- Midhani is engaged in aeronautics, space, armaments, atomic energy and metal related products such as molybdenum wires and plates, titanium and stainless steel tubes, alloys etc.
- GSL builds medium size special purpose ships
Private Sector
- Tata Advanced Systems Limited (TAS) designs and manufactures components, vehicles etc.
- L&T provide naval engineering products and services.
- Mahindra Defence Systems produces vehicles, simulators, arms, sea mines etc.
- Ashok Leyland provides special vehicles.
Extent of Import Dependency
The entire Defence production in India can be placed in three broad groups. First is the production of equipments as conceptualized by DRDO via its research laboratories. Second are the projects that are nominated by the Ministry of Defence after consulting the Services. Third is assembly and production under license from foreign manufacturers.
In our country, the goal of self reliance is a distant dream because almost 70% of the Defence equipment is still being imported. In 1992, a self-reliance review committee was set up under Dr. APJ Abdul Kalam. This committee had developed a Self-Reliance Index (SRI), defined as the percentage share of indigenous content in total procurement expenditure. The committee had set a target of 70 per cent self-reliance by 2005. This target has been now pushed to 2020.
Apart from that, a 1998 task force concluded that only public sector cannot deliver and make India independent from Defence imports. The licensed production was neither able to foster indigenization nor innovation in the Defence production. Further, there were frequent blame games between Services, DRDO and DPSUs, which led to delay in acquisition too.
The steps taken so far in this context are as follows: Firstly, the Defence sector was opened up in 2001. With that, the domestic private sector was allowed to produce Defence items with FDI up to 26% and subject to industrial license and security clearances. Secondly, the Vajpayee Government launched a Defence Procurement Procedure (DPP) in 2002. In 2006, the UPA Government launched Defence Offset Policy and a Long Term Integrated Perspective Plan in 2009, a Defence Production Policy (DPP) in 2011 and various task forces and committees to augment and ‘streamline’ Defence production.
The key idea behind all these steps was to augment the domestic Defence production. Under DPP, various special incentives were provided to encourage domestic private sector. Further, 12 larger private enterprises including TCS, Tata Power, Godrej, HCL, L&T, Mahindra, Kirloskar were given a badge of Raksha Udyog Ratnas (RUR) to enable them to be treated on a par with DPSUs. However, this plan was later scrapped.
