Hashtag Desi (Indigeneous) Defence Industry attains production milestone

Annual defence production hits record high of approx. Rs 1.27 lakh crore in Financial Year 2023-24

Growth of 16.7% over last year; 60% increase since 2019-20. Govt is committed to develop India as a leading global defence manufacturing hub: Raksha Mantri Shri Rajnath Singh 

Make in India is reaching out to the new heights with every passing time. This time the Bharat's ministry of defence has achieved the highest-ever growth in indigenous defence production in value terms during Financial Year (FY) 2023-24. 

This all is achieved because of the successful implementation of the policies and initiatives of the Government, focusing on achieving ‘Aatmanirbharta’. As per the data received from all Defence Public Sector undertakings (DPSUs), other PSUs manufacturing defence items and private companies, the value of defence production in the country has gone up to a record-high figure i.e., Rs 1,26,887 crore, reflecting a growth of 16.7% over the defence production of the previous financial year. The value of defence production in FY 2022-23 was Rs 1,08,684 crore.

It's the achievement and country is acknowledging that the ‘Make in India’ programme is crossing new milestones, year after year.The Government’s unwavering resolve to develop India as a leading global defence manufacturing hub.

Of the total value of production (VoP) in 2023-24, about 79.2% has been contributed by DPSUs/other PSUs and 20.8% by the private sector. The data shows that in terms of absolute value, both DPSUs/PSUs and private sector have recorded a steady growth in defence production. Raksha Mantri Shri Rajnath Singh congratulated the industry, including DPSUs, other PSUs manufacturing defence items and the private industry for taking the defence production at an all-time high.

Credit for this milestone is attributed to the policies reforms/initiatives and ease of doing business norms by the Government in the last 10 years with focus on attaining self-reliance. The indigenisation efforts have been pursued aggressively on a sustained basis, that resulted in the highest ever VoP. 

Advancements in the defence exports have been contributinhg tremendously to the overall growth in the indigenous defence production. It may be recalled that defence exports touched a record-high of Rs 21,083 crore in FY 2023-24, reflecting a growth of 32.5% over the last fiscal when the figure was Rs 15,920 crore.

In the last five years (since 2019-20), the value of defence production has been increasing steadily, and grown by over 60%. 

What are the key projects under Make in India?

The key projects under Make in India scheme include setting up of defence corridors in Uttar Pradesh and Tamil Nadu, and testing of indigenous defence products like Akash Surface to Air Missile System, Dhanush Artillery Gun system, Medium Range Surface to Air Missile (MRSAM), Agni-5, BrahMos, Pinaka Mk-I (Enhanced) Rocket System (EPRS) and Pinaka Area Denial Munition (ADM) rocket systems, helicopter-launched Anti-Tank Guided Missile ‘HELINA’.

The government has issued a total of 568 Defence Industrial Licenses to 351 companies, and 117 companies covering 170 licences have commenced production.

How fruitful is recent push for Make in India?

India continues to hold the title of the world's largest arms importer, despite ongoing efforts to bolster its defense-industrial base. Between 2019 and 2023, the country accounted for a significant 9.8% of the total global arms imports, reflecting a strategic vulnerability in its defense procurement.

Steady Increase in Arms Imports

Recent data from the Stockholm International Peace Research Institute (SIPRI) reveals a 4.7% increase in India's arms imports between 2014-18 and 2019-23. 

Amid the Russia-Ukraine war, India is awaiting the timely delivery of the S-400 air defence systems under a deal signed in 2018. The deal — worth $5.43 billion — faces looming U.S. sanctions under CAATSA (Countering America’s Adversaries Through Sanctions Act. In addition, several new deals are in the pipeline including 12 Su-30MKI aircraft and 21 MiG-29 fighter jets for the Indian Air Force. However, the Defence Ministry is carrying out a review of all direct import deals in a bid to promote domestic manufacturing.

Challenges and Initiatives in Indigenous Production :- 

Despite efforts to promote indigenous defense production, including the 'Make in India' initiative, challenges persist. None of the 'Make in India' projects under the strategic partnership model have materialized yet. Additionally, India has attracted only limited foreign direct investment in defense production, indicating the need for further policy reforms.

The Strategic Partnership (SP) model, a cornerstone of India's efforts to boost indigenous defense production, has faced significant challenges. The Defense Ministry's identified SP projects, including the manufacture of submarines, naval choppers, and fighter aircraft, have yet to materialize despite their critical importance and substantial budget allocations.

Need for Overhaul in SP Policy

Experts argue that the SP policy requires a complete overhaul. Key areas for improvement include a reassessment of the pricing methodology, ensuring long-term orders to sustain production, and addressing other bottlenecks that hinder project implementation.

Low Foreign Direct Investment (FDI) in Defense

India's defense sector has attracted only a meager Rs 5,077 crore in FDI since its opening to private companies in 2001. This is despite the government's efforts to liberalize FDI regulations, allowing up to 74% through the automatic route and up to 100% through the government route in 2020.

Focus on Self-Reliance in Defense

Indian Defence Minister Rajnath Singh recently emphasized the importance of self-reliance in defense production. He highlighted that India's heavy reliance on arms imports could compromise its strategic autonomy, urging for greater domestic production capacity to meet the country's defense needs.