With the COVID-19 pandemic eviscerating the Indian economy, the government recently announced a stimulus which also contains a defence ‘Make in India’ (MII) package. The measures include:
- increasing the FDI percentage in defence manufacturing
- a negative list for imported weapons
- separate budget for Indian-made military equipment
- corporatisation of the Ordnance Factory Board (OFB)
- reform of defence procurement
The ‘Make in India’ programme is primarily being impelled by the imperative to reduce arms import bills and ‘optimise’ defence expenditure – India’s FY2019 defence budget of USD 71.1 billion was the highest in South Asia and the third-highest in the world, and for the past five years, it has been the world’s second largest arms importer.
‘Make in India’ in Defence Sector: A ‘New’ Idea?
The ‘Make in India’ notion, however, is not new. In 1990, India had called for achieving 70 percent self-reliance in defence. PM Modi, in his first address from the Red Fort (15 August 2014), espoused a ‘Make in India’ package of ‘satellites to submarines’ – the Defence Production Policy of 2018 stipulates that by 2025, India must achieve self-reliance in producing major platforms, as also export arms worth USD 5 billion (FY2016 defence exports: Rs. 1,495 crore).
But there are systemic reasons as to why the programme has not witnessed substantial traction, some of which have been already outlined in various publications.