Defence

Ban on import of 101 defence items: A signal to home defence industry, but commitment faces challenges

As the rising defence imports bill over the past two decades has constrained India’s strategic rise, the goal of making the country self-reliant in defence production has been on the priority list of defence ministers, especially after the 1999 Kargil War. The Make in India scheme announced in 2014 aimed to develop the indigenous defence industry, but has failed to achieve its targets.

Defence Minister Rajnath Singh’s announcement of a negative import list of 101 defence items as a major step towards ‘self-reliant India’ is in line with this thinking. The list is in some ways a throwback to the licence permit raj of the pre-liberalisation era, but strong feedback from industry has forced the government to intervene in the very complex defence industrial sector.

The major complaint from the domestic defence industry was the absence of a commitment from the armed forces on procuring a defence item that was developed and produced in India. By putting certain items on the embargo list and creating a separate budget head for domestic capital procurement, the government has sent a signal to indigenous industry.

As this list has been produced by the defence services, they have become an equally important stakeholder in this scheme, which has been driven by the newly-created Department of Military Affairs under the Chief of Defence Staff, Gen Bipin Rawat. If the services handhold the industry, as promised, the indigenous defence producers will have no excuse left to not be able to step up quickly.

However, major challenges remain. The promise of contracts worth almost Rs 4 lakh crore to the domestic industry over the next 5-7 years does appear impressive – but so was the figure of Rs 3.5 lakh crore for projects under the Make in India scheme, all of which got stuck in the pipeline.

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