Boost for defence industry

The phased embargo on the import of 101 weapons and military platforms marks a major reform initiative to boost the domestic industry. The Ministry of Defence’s ‘negative import list’ includes artillery guns, assault rifles, warships, sonar systems, transport aircraft, light combat helicopters and radars. Contracts worth almost Rs 4 lakh crore are expected to be placed within the next five to seven years. A separate budget head has been created with an outlay of Rs 52,000 crore for domestic capital procurement in the current financial year. India Inc has been quick to describe the decisions as path-breaking. A clear signal has been sent to the indigenous industry of a commitment, and not just intent as in the past, from the armed forces on procuring ‘made in India’ defence items.

The list follows elaborate consultations with all the stakeholders — the Army, Air Force, Navy, Defence Research and Development Organisation, the Defence Public Sector Undertakings, Ordnance Factory Board as well as the private sector. A huge opportunity has been provided to the defence producers to step up, and that too quickly. Execution would remain a key monitorable. Handholding cannot replace technological capability, capacity and advancement. Competing against the best in the world would require those best equipped to take on the task, not fly-by-night operators. The key challenges would be getting enough orders to make the production line economical, and an assurance that the item would be bought even if the cost is more than that of an imported one — at least at the inception stage.

The defence procurement procedure, adopted in 2016, requires import as a last resort. The new list goes a step further as it takes away the option of importing the items. Boosting local manufacturing and reducing reliance on imports has not paid much dividends despite the noise around it for years. Indian manufacturers have a point to prove. The linkage with institutes of repute and focused research and development can be game-changers.