Defense Research and Development: How many steps far in indigenization
A policy has been adopted to ban the import of spares and sub-systems used by the army and to produce them in the country itself.
This list includes artillery, assault rifles, transport aircraft, radar and many more. The Ministry of Defense says that the list of these items has been prepared by the Ministry of Defense after consulting all the concerned parties.
It also includes the military, private and public sector industries to assess their current and future capability to manufacture war equipment. This policy will be implemented in a phased manner by December 2025. Recently, the government has released the fourth list of 928 parts. But there is still dependence on foreign countries for major defense needs. The parts of many of the defense equipment that are being made in India even today come from abroad.
India lags far behind China in terms of budget allocated for defense research and development. In early February 2022, Union Finance Minister Nirmala Sitharaman in the 2022 budget allocated a total of US$ 70.23 billion in the defense budget for the year 2022-23, which is about 13.3 percent of the national budget.
The share allocated for research and development (R&D) in this budget is US$ 1.24 billion which is a very small amount, and just 1.7 per cent of the total defense budget. Private sector industries, start-ups and educational institutions have raised concerns on several occasions about such a meager allocation.
However, the government tells it enough. While trying to allay the apprehensions of the private industry, the government has said that apart from increasing the sales guarantee for them, the government will also extend the source equipment. After the introduction of this policy, the participation of the private sector in the acquisition plan of the government has increased.
Defense experts consider India’s research and development (R&D) budget to be low when compared to countries with major military budgets across the world. India’s situation is being compared with that of China. Between 2017 and 2019, China spent about nine to 10 percent of its defense budget on defense research and development.
Recently the annual report of the Stockholm International Peace Research Institute has also come out. According to this report, India is the world’s third largest spender in the military sector. America is at number one in this list and China is at number two. According to Sipri’s report, India spent $71 billion in the defense sector in the year 2019, which is 6.9 percent more than the year 2018.
In 2019, China spent $261 billion on defense, and the US spent $732 billion. Till now, India buys most of the military products from Russia. As far as India is concerned, the allocation on research and development in the current defense budget for the year 2022-23 is less than two per cent of the total defense budget, indicating an even greater gap.
In the absence of much budgetary support for defense research and development, the government and the Ministry of Defense are now considering other options. In the report of the Standing Committee of the Lok Sabha in the year 2020/21, the Defense Ministry once again emphasized on acquiring more technology, then in the year 2000, the BJP government adopted a new path for Foreign Direct Investment (FDI) and promoted it.
It is now expected that the shortfall in the budgetary allocation for defense research and development will be compensated. It is not yet clear how it will be beneficial and it may take time to understand how much will be benefited from the decision to increase FDI from 49 per cent to 74 per cent.
Policy and License
Many equipment which are being manufactured in India are being manufactured here on license basis. Being made on the basis of license means that the foreign company has the license to make military equipment, and that foreign company has tied up with India, because of which it is able to make these products in India. It is not clear in the government’s policy whether the equipment made on license basis will also be considered as self-sufficient or not.
The parts of many of the defense equipment that are being made in India even today come from abroad. Many equipment which are being manufactured in India are being manufactured here on license basis. Being made on the basis of license means that the foreign company has the license to make military equipment, and that foreign company has tied up with India, because of which it is able to make these products in India.
India imports engines and many other parts of light combat aircraft from abroad and then manufactures them here. In 37 years only its basic model could be prepared in India. The prototype of the Mark 1 and Mark 1A is yet to be developed in India. It will take another four to five years to make it. Similar is the story of the Light Combat Helicopter.
what do experts say
Investing in the defense sector takes a long time to make profits. Small budget cannot be started in this field. More investment has to be made in these. The outside company made better equipment than us at any given time, so we were left behind in the competition. Investors are getting encouragement from the new policy of the government.
- Avnish Patnaik, Society of Indian Defense Manufacturers (CII)
As long as foreign companies interfere in defense deals, the slogan of self-reliance in defense equipment cannot be successful. For this the focus has to be on quality. Second, sometimes large-scale domestic manufacturing of weapon systems is not permitted for economic reasons. In this case you have to import.
- Lt Gen (Retd) Ashok Mehta, defense specialist