Recent Developments in Defence Sector in India

Self-Reliance and Indigenisation Initiatives:

• Positive Indigenisation Lists: The Department of Military Affairs (DMA) released the fifth Positive Indigenisation List, comprising 98 high-tech systems, sensors, and weapons that will be sourced domestically, following the Defence Acquisition Procedure 2020. The DMA had previously introduced four lists comprising 411 military items, while the Department of Defence Production (DDP) notified four lists totaling 4,666 items.
• HAL Helicopter Factory: The Hindustan Aeronautics Limited (HAL) inaugurated India’s largest helicopter manufacturing plant in Tumakuru, Karnataka. Initially, the factory will produce 30 Light Utility Helicopters (LUHs) per year, with potential to scale up production.
• Tejas Combat Jets and C-295 Aircraft: HAL delivered the first twin-seater Light Combat Aircraft Tejas to the Indian Air Force (IAF). The IAF also inducted its first C-295 transport aircraft through a collaboration between Tata Advanced Systems Limited and Airbus Defence and Space.

• Record Defence Production: In FY 2022-23, India’s defence production crossed the Rs 1 lakh crore mark for the first time. This milestone was achieved through policy reforms that streamlined the integration of MSMEs and startups into the supply chain, resulting in a 200% increase in defence licenses.
• Record Defence Exports: Defence exports reached an all-time high of Rs 16,000 crore in FY 2022-23, tenfold higher than 2016-17. Major export platforms include Dornier-228 aircraft, BrahMos missiles, and Akash missile systems.

Exported Products: Key exports include missiles, artillery guns, rockets, armoured vehicles, offshore patrol vessels, personal protective gear, radars, surveillance systems, and ammunition.

·        Bullet-Proof Jackets: India has exported bullet-proof jackets to 34 countries, including Australia, Japan, Israel, and Brazil.

·        Ammunition Exports: Ammunition (5.56mm to 155mm) has been exported to countries like the UAE, Egypt, Indonesia, and Thailand.

·        Defence Electronics: The United States, United Kingdom, and France have acquired defence electronics from India.

·        Fast Interceptor Boats: Mauritius, Seychelles, and the Maldives have imported these boats from India.

·        Tejas Combat Jets: HAL is negotiating the sale of indigenous Tejas multirole combat jets to Argentina, Egypt, and Nigeria. The Philippines, the US, Australia, and Indonesia have also shown interest.

·        Armenia’s Imports: Armenia, amid conflict with Azerbaijan, is a significant importer of India’s Akash Surface-to-Air Missiles.

·        BrahMos Exports: In April 2024, India delivered the first batch of BrahMos supersonic cruise missiles to the Philippines under a $375 million deal signed in January 2022. The deal includes three batteries of the missiles, launchers, and related equipment. The Indian Air Force used its C-17 Globemaster aircraft to transport the missiles to the Philippines’ Marine Corps.

Despite these advances, India remains the world’s largest importer of defence supplies, as reported by the Stockholm International Peace Research Institute (SIPRI). Russia remains India’s primary arms supplier, accounting for 45% of its military imports. Between 2018 and 2022, France emerged as the second-largest supplier, overtaking the US.

·        India’s share of global arms exports remains modest, not placing it among the top 25 defence suppliers worldwide. The country has introduced measures to boost self-reliance in defence, including phased import bans, aiming to achieve Rs 1.75 lakh crore in defence manufacturing turnover by 2025.

·        Contracts with Bharat Electronics Limited (BEL): The Ministry of Defence signed contracts worth Rs 17,176 crore with BEL to supply radar systems, electronic warfare suites, and other crucial defence systems.

·        HTT-40 Trainer Aircraft: HAL will supply 70 HTT-40 Basic Trainer Aircraft to the IAF at a cost of Rs 6,828 crore.

·        Upgraded Akash Weapon System: Bharat Dynamics Limited will supply an improved Akash Weapon System to the Indian Army, worth over Rs 8,160 crore.

·        Tunnels and Bridges: The BRO is working on 20 tunnels, including the Sela Tunnel and Kandi Tunnel, to improve connectivity in high-altitude regions. Several bridges, including the 345.70m Shyok River bridge in Ladakh, have also been completed.

2.     Global Supply Chain Integration: Collaboration with countries like the USA and France helps India align with international defence supply chains.

3.     Strategic Interdependence: Exporting defence equipment creates dependencies for maintenance and upgrades, fostering technological ties with partner nations.

4.     Enhanced Military Cooperation: Defence exports improve compatibility for joint operations, expanding military collaboration opportunities.

5.     Geopolitical Influence: Defence ties enhance India’s strategic position and strengthen diplomatic relations with partner countries.

6.     Self-Reliance: Focusing on indigenisation bolsters India’s defence sector, reducing reliance on imports and enhancing its influence in the Indo-Pacific region.

2.     Project Delays and Cost Overruns: Delays in critical defence projects and cost overruns impact growth. According to the Ministry of Defence, 23 out of 55 DRDO ‘mission mode’ projects are behind schedule.

3.     Insufficient R&D Funding: With a Gross Expenditure on Research and Development (GERD) of only 0.65%, inadequate funding for R&D hampers innovation and investment.

4.     Infrastructure Deficit: A lack of infrastructure raises logistics costs, reducing the defence sector’s cost competitiveness and efficiency.

·        An overarching guiding policy to boost India’s defence production capabilities, aiming for self-reliance and exports.

2.     Multi-Pronged Steps Towards a Self-Reliant Defence Sector:

·        Progressive changes have been implemented to empower private industries.

·        The Defence Procurement Procedure (DPP) 2016 introduced the Indian IDDM (Indigenously Designed, Developed, and Manufactured) category, prioritizing it over others.

3.     Strategic Partnership:

·        The strategic partnership model allows Indian companies to collaborate with foreign Original Equipment Manufacturers (OEMs), enabling technology transfer and manufacturing capabilities.

·        The first Request for Proposal (RFP) for conventional submarines is underway.

4.     Positive Indigenization:

·        The government has implemented self-imposed import restrictions to empower domestic industries.

·        Two positive indigenization lists, comprising 101 and 108 items respectively, cover platforms, weapon systems, sensors, and more.

2.     Framework for International Sales: Establish a structured framework to enable easier international transactions in defence exports.

3.     Allow Defence Lines of Credit and Lower Interest Rates: Include defence Lines of Credit in proposals and reduce interest rates to encourage exports.

4.     Innovation and Technology Licensing: Protect national interests while fostering innovation by supporting startups and granting technology licenses.

5.     Integrate Defence and Education Sectors: Collaborate with the education sector to drive innovation in defence technology.

6.     Establish a Think Tank: Bring together national and international experts to strategize on improving India’s defence exports.