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Growing defence industry The Excelsior 17 Nov 2022
A few recent announcements indicate the coming of age of domestic defence industries. Kalyani Strategic Systems Limited revealed receiving an order worth USD 150 million for supplying 155mm howitzers. It did not name the country which placed the order but confirmed it was in a non-conflict zone. The company had mentioned during the recently concluded defence expo that it was setting up the world’s largest artillery gun manufacturing facility, wherein it will produce one gun per day as compared to the current norm of 30 days. This implies that it expects orders for its products to rapidly multiply. The company is also involved in the development of the ATAGS (Advanced Towed Artillery Gun System).
During the defence expo in Lucknow in 2020, Saudi Arabia had displayed its intent to test two of Kalyani’s gun systems, the 155mm Bharat 52 and the 105mm Garud V2. However, none of these were tested by the Indian artillery, reasons for which remain unknown. There are also reports that the Cochin Shipyard Ltd has bagged a European order for manufacturing Service Operation Vessels worth Rs 1000 crores. It is also producing eight Multi-Purpose Vessels for Germany.
The sale of Brahmos supersonic missiles to Philippines worth USD 375 million is well known. It is possible that Indonesia would be the next procurer of Brahmos missiles. Vietnam has also envisaged interest for it. Nations which face a Chinese threat in the South China Sea seek Indian equipment support to counter these threats. The Tejas aircraft has been grabbing global attention due to its cost and reliability. It is being compared with its contemporaries from China and elsewhere. It is expected that it would soon receive global orders.
In early 2020, Armenia purchased four Swathi Weapon Locating Radars from India. It has currently signed a USD 245 million deal for multiple-launch rocket systems (Pinaka), anti-tank rockets and ammunition. It is also negotiating procurement of UAVs from India.
Chennai-based drone start-up Garuda Aerospace inked a deal with Lockheed Martin CDL Systems to utilize Lockheed’s advanced autopilot and tracking software for defence and commercial drones. Other domestic drone companies are eyeing the global market, mainly in west Asia and Africa. These are few examples of rapid strides made by the domestic defence industry.
Russia’s Rosoboron export signed an agreement to manufacture its AK-203 assault rifle in Amethi. Production is likely to commence by the end of the year. By 2024, Sweden’s Saab Defence will set up a facility in India to produce its Carl-Gustaf M4 multi-role weapon system. Airbus and Tata Advanced Systems Ltd are establishing the C 295 aircraft manufacturing facility in Vadodara. Lockheed Martin has repeatedly stated that if its aircraft (F 16/21) is selected it would shift its manufacturing facility to India.
Evidently, global firms are seeking to partner with Indian companies to become part of the growing Indian market. Many more organizations are planning to establish manufacturing plants in India, provided they are assured of orders. India is becoming a destination for defence manufacturing.
To encourage the domestic defence industry there are three different ‘Make in India’ schemes. Under the ‘Make I’ the government funds upto 90%, while under the ‘Make II,’ the company funds prototype development of equipment or platforms or even upgrades, while ‘Make III’ is in collaboration with a foreign manufacturer for production in India. The armed forces have multiple projects in each category. Once trial tested and accepted by the Indian forces, these would be up for grabs for the global market. India’s equipment trials are amongst the most stringent in the world.
A government report stated that Indian defence manufacturing registered exports worth Rs 8000 crores in the first six months of this year. It aims to achieve a figure of Rs 35000 crore by 2025. Indian defence attaches have been tasked to be pointsmen for domestic manufacturers and have been allocated a specific budget for the same. They are recalled to India at regular intervals where they are provided with updated inputs. Post their briefing this year, the attaches escorted their accredited nations delegations to the defence expo.
Low-cost manufacturing in India is a major benefit. It opens doors to markets in Africa, West Asia and ASEAN, where nations cannot afford costly western manufactured weapon systems. To further boost sales the government offers lines of credit for Indian defence procurements apart from Government-to-Government deals and upfront funding for delayed pay-ins. The government’s intent to rapidly issue export licences also supports private defence manufacturers.
India’s foreign policy is an added advantage. India is respected as a nation which adheres to its commitments. Its holding of India-Africa Defence Dialogue and the Indian Ocean Region plus conclaves, each with over 40 members during the defence expo only added to presence of national delegations at the expo. It is these nations which would seek Indian products due to cost benefits.
However, there are shortcomings which must be addressed. India faces roadblocks in core technologies, critical subsystems and investment in R and D. These are unlikely to be overcome soon unless the government pushes for joint ventures or transfer of technologies. It must also avoid losing out on opportunities. A classic case is the MOD choosing the L1 (Lowest vendor) for the submarine launched ‘smart’ wire guided homing torpedoes instead of a vendor willing to share high-end technology.
If Indian products are to compete in the global market, image building of the Indian defence industry is essential. The best means is offering equipment already inducted into the Indian armed forces. An additional methodology is that all global defence exhibitions must have an Indian pavilion where, apart from displaying India’s government industries produce (as is the norm), it showcases products from small and middle level private companies, projecting government support to the industry.
The government can also promise an end-to-end service for Indian items, an aspect most global manufacturers shy away from. It would carry weight if assured by the government. Chinese defence products are being dumped solely because after-sales service is tardy or missing. Finally, there is a need to create a body comprising representatives of the industry and officials of the MOD and MFA to push exports.