Defence Indigenization

Defence Indigenization: The Defense Minister has just unveiled the fifth Positive Indigenization List (PIL) featuring 98 items. This list is crucial as it highlights the equipment that our armed forces will be acquiring from local suppliers. Among the items are a cutting-edge infantry combat vehicle, drones, precision kill systems, radars, and various other essentials. It’s worth noting that the Department of Military Affairs meticulously curated this list after engaging in extensive consultations with stakeholders from across the board.

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About

Indigenization aims to develop and produce defense equipment within the country to achieve self-reliance and reduce imports.
Self-reliance in defense manufacturing is a key objective.
DRDO, DPSUs, OFB, and private organizations play a critical role in indigenization.

Background

India shifted from license-based production to indigenous design due to overdependence on the Soviet Union.
R&D investments began in the mid-1980s.

Need for Defence Indigenization

For self reliance
To reduce dependency on foreign player and ensure security of nation
To conserve or reduce Balance of Payment deficit
To promote employment and also exports
To reduce cost of production to India and thereby reduce fiscal deficit.
According to the Stockholm International Peace Research Institute (SIPRI), in 2019, India became the third-largest defence spender in the world

Challenges

Inefficiency, productivity issues, and low R&D.
Delays and cost-overruns in projects like Battle Tank Arjun and LCA Tejas.
Lack of military inputs in decision-making.
Absence of a National Security Doctrine and long-term defense planning.
Lack of institutional capacity and capability to effectively implement indigenization policies.
The absence of a permanent arbitration committee for expeditious dispute resolution, as seen in the USA’s Defense Advanced Research Projects Agency (DARPA).
Inadequate infrastructure increases logistics costs, reducing cost competitiveness and efficiency.
Challenges in acquiring land hinder new players’ entry into defense manufacturing.

Significant steps taken in defense indigenization

Back in 1983, the Integrated Guided Missile Development Program (IGMDP) kicked off with the aim of crafting missile systems.
By 1990, the Self-Reliance Review Committee laid out ambitious goals, setting targets for a self-reliance index (SRI) to surge from 30% to 70% by the year 2005.
There was a noticeable shift in focus towards collaborating with foreign partners for co-development and co-production initiatives.

Government Initiatives

The Defense Procurement Policy strongly encourages buying defense goods that are designed, developed, and made in India, known as “Buy Indian-IDDM.”
The Defense Acquisition Council has the option to expedite the procurement process for weapons through a “fast-track” route.
The E-Biz Portal simplifies the application process for industrial licenses, making it more efficient for businesses.
Guidelines on Outsourcing and Vendor Development aim to boost the involvement of the private sector in defense projects.
The FDI policy in the defense sector has been revised to allow up to 74% foreign direct investment with automatic approval, up from the previous limit of 49%.
Preference is given to procurement categories such as ‘Buy (Indian)‘, ‘Buy & Make (Indian)‘, and ‘Make‘, encouraging the use of domestically sourced materials and production.