INDIA’S SELF-SUFFICIENCY IN DEFENCE PRODUCTION: CAN BANGLADESH BENEFIT?

Indian defence products worth $1.76 billion were exported in 2021 to 75 countries, of which the USA was the highest importer apart from Southeast Asia and Africa. As a South Asian neighbour, Bangladesh recently joined India’s flagship defence exposition DefExpo-2022 from 18th-22nd October, when the two sides reviewed key ongoing bilateral defence cooperation issues between the countries and explored ways to enhance defence industrial cooperation, writes DR DEBJYOTI CHANDA from India.

The 12th edition of India’s flagship defence show, branded as DefExpo-2022, was held this year in Gujarat’s Gandhinagar from 18th-22nd October with 75 countries and 1,340 Indian companies. On October 19, Indian Defence Minister Rajnath Singh hosted the Indian Ocean Region Plus (IOR+) Conclave on the sidelines of the five-day expo. The mega event addressed common threats in the IOR and measures to address the same. Along with the IOR+ Conclave, the minister also held bilateral meetings with delegation leaders from Bangladesh and other countries, which are attending the DefExpo. In the course of the meeting with the Bangladesh side, the Indian Defence Minister met with Bangladesh Prime Minister’s Security Advisor Maj Gen (retd) Tarique Ahmed Siddique. A Ministry of Defence (MOD) release later said the entire spectrum of defence cooperation was discussed during the meeting, with focus on identifying avenues to expand mutually beneficial collaboration.

On the same day, Indian Defence Secretary Ajay Kumar held a bilateral meeting with a Bangladesh delegation led by Armed Forces Division Principal Staff Officer Lt Gen Wak- er-Uz-Zaman on the sidelines of DefExpo. MOD in a separate statement said, “They reviewed the key ongoing bilateral defence cooperation issues between the two countries and explored ways to enhance defence industrial cooperation.” Earlier in August, India and Bangladesh conducted their fourth annual defence dialogue. Tri-services staff talks were also held in the same month. Meanwhile, India offered Bangladesh a $500 million Line of Credit (LoC) for the purchase of Indian military hardware for the latter’s defence services. This comes after reports that the Bangladesh’s military is dissatisfied with the quality of the defence equipment it has received from Chinese suppliers. Defence cooperation between the two neighbourly countries was also discussed by Prime Ministers Narendra Modi and Sheikh Hasina when the latter visited New Delhi on 5-8 September.

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Looking at India, one can easily understand that the South Asian country’s defence capacity has reached a new height in recent years in its quest to become a global power. When in August this year, INS Vikrant, India’s first indigenous aircraft carrier built by state-owned Cochin Shipyard Limited was commissioned into the Indian Navy amidst much fanfare, the world looked at India in wonder. INS Vikrant was installed with long range surface to air missile LR SAM and multifunctional digital radar systems. India’s Defence Research and Development Organisation (DRDO), Israel Aerospace Industries, and Bharat Dynamics Ltd collaborated to build these LR SAMs jointly. INS Vikrant weighs 42,800 tons and is powered by four General Electric engines and can carry off an air wing of 30 helicopters, fighters, and unmanned aerial vehicles. It consists of 16 hospital beds, 250 tankers of fuel, and 2400 compartments able to accommodate 1600 personnel.

State-owned Hindustan Aeronautics Ltd has developed a light combat aircraft LCA ‘Te- jas’, which has a general range of 850km and a combat range of 500km. Fitted with active electronically scanned radar for critical operation capability, it can be refuelled on air. LCA Tejas has also generated much curiosity amongst the buyers in the international defence markets. On the other hand, BrahMos is a medium-range ramjet supersonic cruise missile jointly developed by India and Russia, who have together formed Brah- Mos Aerospace Private Ltd. The name has been derived from the names of two rivers; Brahmaputra of India and Moskva of Russia. A $375,000,000 contract has already been signed with the Philippines for the export of this missile and talks with Indonesia are in an advanced stage. BrahMos has a speed of three times that of sound, making it notoriously difficult to intercept.

DRDO has also developed ‘Pina- ka’ multi-barrel rocket launchers (MBRL) and is being manufactured by private sector companies in In- dia. Initially developed with an approximately 40km range, its advanced version has an extended range of 70km to 90km. Pinaka (MBRL) can launch twelve high explosive rockets in 44 seconds, used successfully during the Kargil war and primarily made for the Indian army. A deal has been signed to sell this to Armenia, which is at present engaged in conflict with neighbour Azerbaijan. But all these didn’t happen by chance. Long years of meticulous planning has gone in the achievement of this success. A peep into the just-held DefeExpo will pro- vide us with an idea of the kind of behind-the-scene activity being undertaken by India to make a serious foray and a long voyage in the international defence market.

India hosted DefExpo, which is Asia’s largest, this October in the western state of Gujarat. Prime Minister Narendra Modi upon assuming office in 2014 embarked on an ambitious plan, codenamed ‘Atmanirbhar Bharat’, aiming at self-reliance in all sectors. As part of this project, the indigenous defence production sector, which comprises public sector enterprises, private sector companies, startups and joint ventures, is working relentlessly to make the “make in India” programme a great success.

“Invest for Defence is the first ever marquee event of MOD targeted to promote investment in the defence sector in the country, as well as foreign original equipment manufacturers (OEMs)”.

The five-day DefExpo was a big sell-out, showcasing the big push the Indian government is making for technology acquisition for the production of defence goods within the country and also engaging in liaison with overseas importers to establish linkages for export opportunities. The expo created a forum for prominent private-sector defence manufacturers to interact with government officials and armed forces leadership to enable them understand the requirements of the defence industry better.

A total of 28 defence ministers from foreign countries were present in this mega event where 1340 exhibitors participated in and 451 MoUs were signed with orders to the domestic industry worth Rs 150,000 crores. The government of India during the exhibition unveiled an ambitious blueprint of $25 billion defence production in the coming years with an export target of $5 billion. The Ministry of Defence stated, “Invest for Defence is the first ever marquee event of MOD targeted to promote investment in the defence sector in the country, as well as foreign original equipment manufacturers (OEMs)”.

Domestic and foreign institutional investors and venture capital- ists enthusiastically responded to the government’s call and participated in the event. During the exhibition, the prowess of the Indian defence manufacturing industry was showcased through seminars, displays, investment promotions and drone shows. A number of panel discussions were held during this flagship defence exhibition in which officials of the Ministry of Defence, industry stalwarts, and armed forces leadership participated and discussed the indigenousness of advanced and futuristic products and technologies necessary for land, naval, air force and homeland security. Two special conclaves were organised targeting the Indian Ocean region and the African nations.

It may be mentioned that the Indian defence budget has gone up by 35% in the past three years. Ten states have chalked out individual policies to attract investment in the sector, and two defence corridors have al- ready become operational in Uttar Pradesh and Tamil Nadu. DRDO, the premier defence institute working in the government sector, is at present engaged in 430 projects developing strategic and tactical weapon systems, defence equipment and technologies. DRDO in a press release has said it has designed and developed 30 ecospheres, which highlights the partnership with in- dustry and academia that has led to the advancement of technology in its laboratories as well as the manufacturing- ing of finished products in industrial outlets.

The contribution of DRDO in this sector must be specially mentioned, as at a point of time, it was the singular organisation engaged in developing armaments, combat vehicles, engineering equipment, underwater sensors and weapon systems, advanced computing, microprocessors, solid state materials and high altitude devices, system analysis and war gaming related to defence production in India. When India test-fired a DRDO-developed laser-guided antitank missile from the indigenous Arjun main battle tank, also developed by DRDO last June, it was another step forward in self-reliance, but also a clear signal to foes regarding India’s defence preparedness.

Similarly, active collaboration is being held between industry associations, think tanks, and public sector entities engaged in defence manufacturing together with service headquarters (SHQs) Ministry of Civil Aviation, Directorate General of Quality Assurance (DGQA), and state governments to encourage participation in this niche area. The government is also encouraging setting up of defence startups and medium and small-scale enterprises (MSMEs). Indian companies, Indian subsidiaries of foreign OEMs, divisions of companies registered in India, and exhibitors having joint ventures with Indian companies were among the 1340 DefExpo exhibitors this time. Much stress was laid on exports, financing, and investment in defence, and R&D especially focusing on aerospace and futuristic autonomous technologies in air dominance.

Tata, Reliance, Mahindra, Adani, Larson and Tuburo, Ashok Leyland, Kalyani Rafael Advanced Systems, Bharat Forge, and Lockheed Martin are some of the prominent Indian manufacturers, which are engaged in manufacturing defence-related equipment from ammunition to shipbuilding, from small devices to large bulletproof armoured vehicles. Private players are, to be more specific, engaged in the undermentioned high-tech areas, too:

Missile systems and subsystems;

Optronic systems;

Unmanned aerial systems for aerospace and aero structures;

Command and control systems;

Radar systems and subsystems; Homeland Security solutions.

The ‘make in India’ policy at the stratospheric, visionary level has given a patriotic long term aim for implementation in a variety of business sectors. These include electronics, mining, oil and gas, pharmaceuticals, thermal power and other alternative energy, aviation, biotechnology, information technology, business process management, ports and shipping, railways, tourism, hospitality and wellness industries apart from indigenous defence production. The key national objective of the ‘make in India’ programme is to achieve self-reliance, conserve critical foreign exchange, develop export potential, enhance technology and skill and use defence manufacturing not only as an engine of national economic growth but also to transform India into a true global superpower.

Time is also a very important factor as most projects in this sector are Greenfield in nature that require a long gestation period. In this connection, a recent report by Bloomberg quoting anonymous sources from the Defence Ministry of India has said that the current policy of self-reliance has left India vulnerable to persistent threats from China and Pakistan. Due to an embargo on defence imports it may leave India “critically short of helicopters by 2026 and short of fighter jets by 2030, leaving the Indian Air Force with less than 30 fighter squadrons well below the required 42”. But the government of India thinks otherwise.

The new policy on defence procurement “mandates be- tween 30% and 60% of homemade components”. This ambitious policy aims “to shift from being the world’s largest importer of defence equipment to meeting the majority of its needs through domestic production”. In- dia is today in the lookout of suitable partners to start joint ventures to manufacture specialist equipment, engage in joint R&D in niche areas, and provision of services and training in cyber security. India’s current limited skillsets for high-tech defence manufacturing are likely to improve as domestic manufacturing boosts in the coming days.

India has all these years met its defence requirements through imports and it green-signaled domestic private sector participation in defence manufacturing only in the year 2001. While other countries with large defence budgets like the UK import 32% of its requirements and the US 9%, about 60% of India’s defence equipment requirements are met through imports. Russia, USA, and Israel are the top exporters of defence equipment to India. Foreign and domestic think-tanks taking interest in India’s burgeoning defence requirements have suggested a multidimensional strategy to boost this sector. Some of these strategies include:

Streamlining of export regulation system;

Export financing via lines of credit;

Adopting a policy of engaging India’s Diplomatic footprint for export promotion;

Strategically adopting an offset policy for indigenous defence production.

The primary aim of the government now is to build a robust domestic supply chain taken care of by private companies, small businesses, and start-ups engaged in the manufacturing of defence products. To promote indigenisation, the Defence Ministry has brought out two positive indigenous lists. “With the first and second lists, contracts worth $7.1 billion have been awarded to Indian companies. We hope that over the next five to seven years the indigenous acquisition will provide $64.28 billion worth of orders for the industry”, Defence Minister Rajnath Singh was heard saying recently in a gathering.

The stalwarts of the industry are calling for new economic models and processes that would help and benefit India’s defence export markets, including fair and quick decisions on contract awards and less bureaucratic red tape to lessen the cost of acquisition. It must be noted that a steady flow of orders are necessary to enable private entities to grow and for this, a level playing field is required. For the private sector, which has the infrastructure and capability, state-run companies should not come in their path of progress and growth, said the industry association chiefs.

To put this in fast-track mode, the following steps have been implemented by the government:

1) Revised defence acquisition procedure 2020;

2) Announcement of two positive indigenisation lists comprising over 209 items;

3) Creating two dedicated defence corridors in Uttar Pradesh and Tamil Nadu;

4) Restructuring the offset policy to attract investment and ensure transfer of technology;

5) Announcing innovation of defence excellence (IDEX) scheme for MSME and startups;

6) FDI in defence increased to 74% through automatic route and 100% through government approval;

7) Licensing procedure necessary to set up defence production units simplified;

8) Implementation of public procurement (preference to make in India) order 2017;

9) Restructuring of the Ordnance Factory Board to seven new defence companies through an action plan by MOD.

India would, however, as an exporter, have to tread a careful path, as often exporting arms and ammunition may result in discord and disharmony among friends, just as it happened when USA decided to provide $450 million to Pakistan to upgrade and maintain its F16 fighter jets, to which India disapproved. Similarly, in 2021, when India sold a Kilo-class submarine INS Sindhuvir to Myanmar, this action made Bangladesh unhappy. However, India said that it was part of its continued commitment to building capacities and self-reliance in the neighbouring countries and its vision of SAGAR (Security and Growth for All in the Region). Colonel Balwan Singh Nagyal recently commented that India, from a country where domestic defence production had meant “assemblage under licence…self-suffi- ciency in defence will be the single-most fundamental of strategic independence.” Defence sector, being a very critical area of the Indian economy, has the potential for tremendous growth as it is backed by a large talented pool of human resources and the modernisation requirement of the Indian Armed forces. Proper policy implementation, active public-private collaboration, boosting indigenous design development and manufacturing will enable to usher in a sustainable defence industrial ecosystem, making the IMF projection of India becoming the third largest national economy by 2027- 28, with only China and USA ahead, a reality.