India today is the largest importer of arms and ammunition in the world with about 70 per cent of our defence requirements still being met through imports. The balance 30 per cent is largely manufactured by Defence Public Sector Undertakings and the Ordnance Factories. Our immediate challenge, therefore, is to reverse this ratio by increasing indigenous procurement to at least 70 per cent in the next 3-5 years.
While increased focus on defence spending is imperative from strategic and geo-political perspectives, our armed forces currently face critical shortages of equipment. The dependence on foreign supplies for key technologies and platforms has rendered India’s national security vulnerable. We have in the past been at the receiving end of technology denials and have encountered serious problems of life cycle support for imported equipment. As a result, our armed forces are facing shortages in several areas such as ammunition, modern assault rifles, bullet-proof jackets, howitzers, helicopters, submarines and fighter aircraft squadrons.
The high dependence on imports has thus been a matter of serious concern over the past several years. That is a key reason for shift in emphasis to permit a greater role for the private sector in defence production. Several steps have been taken to encourage Indian companies to participate in defence procurement. These have eventually culminated in the Defence Procurement Policy (DPP) 2016, which is the result of an inclusive consultative process between the government, armed forces, Defence PSUs, Ordnance factories, R&D establishments, industry associations and private sector companies. DPP 2016 laid notable emphasis on institutionalising, streamlining and simplifying the defence procurement procedures to give a boost to the government’s ‘Make in India’ initiative.
While so far our defence preparedness was to a significant extent dependent on our ability to source requirements of critical systems, equipment and components from abroad, we are now entering a phase where the emphasis is shifting in favour of indigenisation and import substitution.
The emphasis on domestic manufacturing has already started to result in increased private sector investments in defence production. These will, in turn, result in large employment opportunities of the kind that are needed in the country, which is a key objective of the government’s ‘Make in India’ initiative. The government’s decision to leverage the experience, skills and capabilities in Indian manufacturing companies will not only result in greater self-reliance but will also serve as a launch pad to propel India to become a global defence manufacturing base and a large exporter of defence products. Achieving this objective will require all stakeholders to closely work together through intense networking and synergising their capabilities. While cross fertilisation of knowledge and information has already begun, we expect it to gather faster momentum in the years ahead.