In defence sector, let’s Make in India, for India
Prime Minister Narendra Modi's Make in India push at the Aero India show in Bangalore on Wednesday is in keeping with his overall strategy to develop the country as a global manufacturing hub. He has been inviting industries in various fields to set up shop in India, directly or through collaborations, and produce for domestic as well as global markets. Considering that India is arguably the world's largest importer of defence equipment — with its annual import bill at roughly $20 billion — and is poised to see its defence requirements grow manifold, it makes sense for both the Government and the defence sector to work in tandem to reduce imports.
This will not just save the country precious foreign exchange but also have a spiralling impact on local employment, because greater manufacturing of defence material within the country will result in enhanced employment and skill-development among the youth. If the Prime Minister's figures are correct, then even a 25 per cent reduction in defence import and concurrent efforts to scale up domestic production, could lead the creation of two lakh jobs in the country. If the domestic output of defence equipment goes up by 25 per cent, it could result in one lakh jobs for the skilled labour market. These are tantalising figures, but they are, admittedly, still a long way away from realisation.
The primary reason for this is that, for decades little energy was spent in creating a robust defence industry in the country. We continued to be secure in the belief that all our needs would get met from global players. Thus, for years and years we continued to be completely dependent on the former Soviet Union, and later on other countries such as the United States, for a large part of our Armed Forces’ requirements. We did get the equipment, but at stiff terms which went beyond commerce. Moreover, the over-dependence on imports stifled the domestic defence industry, with public sector units such as Hindustan Aeronautics limited and Defence Research Development Organisation ending up performing below par. Given that India today imports nearly 60 per cent of its defence equipment, it has the world's third-largest Armed Forces with burgeoning needs, and 40 per cent of the country's defence budget is devoted to capital acquisition, the scope for scaling up domestic defence output, which stands at a mere seven billion dollars annually, is huge.
If Mr Modi's determination has to percolate, then relevant policies and their effective implementation have to take centre-stage soon. To begin with, public sector organisations in the forefront of defence research and manufacturing have to overhaul their mindsets. The Government has taken some steps to infuse energy into them through senior-level staff shake-ups, and has send the strong message that it was less than satisfied with their functioning or the quality of products they have been producing — and that too way beyond deadlines. These measures need to be followed through. Also, the Defence Ministry must waste no time in announcing a vibrant policy to encourage the more than 3,500 small-and-medium enterprises engaged in defence production. There are also larger projects that need to get off the ground to meet the country’s defence needs.