Foreign direct investment in defense production has increased to 74 percent, from 49 percent, and the government says it will promote “made in India” in that industry.
That was one of the steps outlined by the country’s finance minister, Nirmala Sitharaman, after Prime Minister Narendra Modi announced a special economic package of $307.65 billion (20 lakh crores) under its “Aatma Nirbhar Bharat Abhiyaan,” or “Self-Reliance Campaign.”
“A list of weapons/platforms will be released which will be banned for import based on a year wise timeline. Further, the government has planned to improve the autonomy, accountability, and efficiency in Ordnance Supplies by the corporatization of Ordnance Factory Board,” the Indian government said in a statement.
Defense and strategic analysts based in the United States and India told The Epoch Times that India’s pursuit of self-reliance is the right step in an emerging global and Asian regional order where India is facing a more aggressive China on its border on one side and Pakistan on the other. The country can take clues from countries like the United States, France, and Russia.
The campaign for a self-reliant India was initiated amid the economic challenges during the COVID-19 pandemic, Manjari Singh, an associate fellow with the Center for Land Warfare Studies, an independent think tank of the Indian army, told The Epoch Times.
However, following a bloody skirmish with China in Galwan, India’s defense ministry declared in August that the country would build a stronger domestic defense industry, she said.
An embargo on imports of more than 100 defense-related items may generate contracts worth an estimated 4 lakh crores ($61.53 billion) for India’s domestic defense industry in the next five to seven years, according to a ministry statement.
“The list of 101 embargoed items comprises not just simple parts but also some high technology weapon systems like artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, light combat helicopters (LCHs), radars and many other items to fulfill the needs of our Defence Services,” the ministry said.
Former Lt. Gen Kamal Davar, the first director-general of India’s Defence Intelligence Agency and the former deputy chief of the Integrated Defense Staff, told The Epoch Times that while India has an “unenviable record” of being the world’s largest importer of arms, equipment, and platforms, it’s time that the country pursues self-reliance.
“With the diverse and serious security challenges it confronts, self-reliance in defense hardware is critical and the only way out. India has a huge infrastructure with its dense public sector units and a vibrant private sector. Synergistic partnerships of both while also encouraging foreign collaborators to come and establish their hi-tech factories in India is the only answer,” Davar said.
“Made for India, made by India, and, especially, made in India needs to be genuinely encouraged.”
New Global Order
Singh said India faces a new global and regional world order, in which its adversaries are active in the neighborhood as well on its border, and will never be able to be inclusively self-reliant if it doesn’t develop its indigenous defense production.
“That is the time when we can’t be lagging behind,” she said, adding that indigenous defense production is about the strategic partnerships, and serves as one part of a nation’s overall intelligent defense framework.
India is ranked third in the world for military expenditures. “And yet, we have not focused on our own production in defense,” she said. By contrast, “Pakistan, being an economically constrained country, has fared well in its defense production. They have been supplying different components to various countries, in the Middle East, the Gulf countries like Saudi Arabia, and to African countries as well.”
If India becomes a defense producer, it would give confidence to countries such as Vietnam and Latin American countries, who would know that there’s an alternate supplier of defense equipment, Anil Trigunayat, India’s former ambassador to Jordan, Libya, and Malta, told The Epoch Times.
“A country that can be relied on. India in my view is coming up not only from a commercial perspective but from a perspective that it can be a dependable friend,” he said.
“It’s important for India to play a global role. It’s important that [India] is an independent nation. We are the third-largest economy—soon going to be third-largest, we are fifth today. That’s the taking point. That shows that you have a tremendous opportunity, you have the capabilities to take on responsibilities. Global ambitions also increase towards you, more countries want more done with you.”
Countries India Can Learn From
Experts said India should take clues from other countries in developing sustained self-reliance in defense production and also in creating an environment that encourages innovation and genius equally from within as well as outside.
Trigunayat said India should take clues in indigenous defense production from the United States, France, Israel, and Turkey.
“U.S. had early on taken the lead that was further technologically fine-tuned as a result an of compulsions encompassing space and sea. We can also learn from the French who were vastly dependent in the 1950s and ’60s on the U.S. but since then have become self-reliant and a major exporter of high-quality weapon systems and fighter aircraft including Rafale and Eurofighters, as well as Airbus,” he said.
“Lastly, you’ve got to give it to the Israelis for their technological prowess, especially in defense. Look at Turkey on drones and naval assets, including high-speed patrol boats.”
Ravi Batra, the chair of the U.S. National Advisory Council on South Asian Affairs since 2007, says that India should model its self-reliance in defense production on the United States.
“I think India should model itself on its indivisible best friend—when Prime Minister Modi called us indivisible,” said Batra, who attended the joint session of U.S. Congress that Modi addressed where he called the United States “indivisible” from India.
Batra served as the global counsel from 2018 to 2020 to Antonov, the Ukraine state-owned aircraft manufacturing and service company. He said that India should work to find the genius within the country and should also welcome external genius—and then model itself to celebrate excellence and innovation the way the United States does.
“So India should have an immigration policy that rewards people, acknowledges them, celebrates them when they bring novel ideas, creative ideas, that can make India leapfrog time and generation,” Batra told The Epoch Times.
Need for Institutional Reforms
A paper published in the recent edition of the Raksha Anirveda, an Indian quarterly publication on defense and aerospace issues, says India requires institutional reforms to achieve a “big leap” in defense self-reliance.
The nation opened its defense arena to the private sector two decades ago with the aim of achieving self-reliance, wrote R. Chandrashekhar, a senior fellow at the Center for Joint Warfare Studies. However, the country, which is the second-largest defense market in the world after Saudi Arabia, continues to be largely import-based and government-controlled.
“Despite a number of ‘reforms’ being initiated in the recent past, the question still remains as to why the ‘big leap’ in defense manufacturing seems a distant dream,” Chandrashekhar said.
He said defense production is a long-term commitment in terms of investment and time, and results depend upon how long-term partnerships are nurtured.
“Countries like the U.S., U.K., and France, that are leading in defense manufacturing, have developed an ‘inclusive’ culture of their governments working with the private sector. An ambiance of mutual trust and frequent exchanges to identify and resolve emergent issues is necessary and needs to be institutionalized,” he said.
There’s a greater need for harnessing innovations and to do that and to achieve manufacturing excellence, the Indian government has to tap into the potential of its private sector, as well as setting up an Indian defense finance corporation that can raise money and maintain a sustained cash flow, he said.
Suggestions have been offered toward creating a defense finance mechanism along the lines of the Indian Railways Finance Corp. that can raise money through bonds. By making the bonds redeemable over 10 years or so, the government could facilitate funding to the industry through its startup stage.