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Tuesday, September 22, 2020

Ban on import of 101 defence items: A signal to home defence industry, but commitment faces challenges

The promise of contracts worth almost Rs 4 lakh crore to the domestic industry over the next 5-7 years does appear impressive – but so was the figure of Rs 3.5 lakh crore for projects under the Make in India scheme, all of which got stuck in the pipeline.

Written by Sushant Singh | New Delhi | Updated: August 11, 2020 9:44:52 am
Defence Minister Rajnath Singh’s announcement of a negative import list of 101 defence items as a major step towards ‘self-reliant India’ is in line with this thinking. (Photo: Wikimedia Commons)

As the rising defence imports bill over the past two decades has constrained India’s strategic rise, the goal of making the country self-reliant in defence production has been on the priority list of defence ministers, especially after the 1999 Kargil War. The Make in India scheme announced in 2014 aimed to develop the indigenous defence industry, but has failed to achieve its targets.

Defence Minister Rajnath Singh’s announcement of a negative import list of 101 defence items as a major step towards ‘self-reliant India’ is in line with this thinking. The list is in some ways a throwback to the licence permit raj of the pre-liberalisation era, but strong feedback from industry has forced the government to intervene in the very complex defence industrial sector.

The major complaint from the domestic defence industry was the absence of a commitment from the armed forces on procuring a defence item that was developed and produced in India. By putting certain items on the embargo list and creating a separate budget head for domestic capital procurement, the government has sent a signal to indigenous industry.

As this list has been produced by the defence services, they have become an equally important stakeholder in this scheme, which has been driven by the newly-created Department of Military Affairs under the Chief of Defence Staff, Gen Bipin Rawat. If the services handhold the industry, as promised, the indigenous defence producers will have no excuse left to not be able to step up quickly.

However, major challenges remain. The promise of contracts worth almost Rs 4 lakh crore to the domestic industry over the next 5-7 years does appear impressive – but so was the figure of Rs 3.5 lakh crore for projects under the Make in India scheme, all of which got stuck in the pipeline.

The negative list of 101 items has been chosen carefully by the services, and at least a third of these items – including corvettes and frigates for the Navy and multi-barrel rocket launchers for the Army – are already being produced in India. Sunday’s announcement, while committing to the purchase of these items from indigenous vendors only, did not include any new development or addition of production capacity.

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Some items like the 7.62 X 39 mm assault rifle – which is the AK-203 rifle, to be produced by the Ordnance Factory Board in Amethi with Russian collaboration – are stuck over pricing issues.

Some other items in the list are under development by domestic industry, and are not produced by any other country. These include the Light Combat Helicopter and the light transport aircraft – and any Indian demand for these will automatically be met domestically.

The items in the list are of proven technologies, and do not involve any critical or cutting-edge technology for a next-generation weapon system or platform. The BrahMos cruise missile, mentioned in the list, is jointly produced with Russia, and has a significant share of critical Russian components. That is true of the majority of items that are assembled in India by the defence PSUs, rather than being produced entirely in India.

Even this commitment from the government will not address two other fears of the industry: an assurance of enough orders that would make a production line economical, and the strength of the commitment should an indigenously produced item cost more than an imported one.

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Against each of the 101 items is mentioned a year when import embargo would kick in, leading to apprehensions that demands will be placed with foreign vendors until then, leaving very little for domestic producers. But this may also provide domestic players time to build capability and capacity to produce the items.

The biggest challenge for the government and the armed forces will be to keep this commitment to domestic producers in the event of an operational requirement. As tensions remain high between India and China in Ladakh, it may be instructive to remember that the agenda of self-reliance was originally set just before the 1962 War by Jawaharlal Nehru’s defence minister, V K Krishna Menon.

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