Recently, the Ministry of Defence (MoD) in India has enforced a restriction on the importation of 351 systems and components. This move is part of the third instalment of the Positive Indigenisation List, an initiative designed to boost Indigenisation in Defence Manufacturing.
In June 2021, the MoD had released the second list featuring 108 items, rebranded as the ‘positive indigenisation list’. The first list, dubbed the ‘First Negative Indigenisation’, was published in August 2020 and included 101 items.
Procurement and Timeline
Under this scheme, all 351 items listed will be procured from indigenous sources, adhering to the provisions outlined in the Defence Acquisition Procedure (DAP) 2020. Categories include Buy (Indian – Indigenously Designed Developed and Manufactured), Buy (Indian), Buy and Make (Indian), Buy (Global – Manufacture in India) and Buy (Global).
In terms of timeline, the importation of 172 systems and components will cease from December 2022, with another batch of 89 items stopped from December 2023. The remaining 90 items will no longer be imported from December 2024.
Items Included and the Significance of Initiative
The variety of components includes a missile approach warning sensor, shells, propellants, electrical parts, missile containers, a torpedo tube launcher and a gun fire control system. This self-reliance initiative, Atmanirbhar, is expected to save foreign exchange equivalent to approximately Rs 3,000 crore each year.
Additionally, it aims to encourage active participation from public and private sectors, infuse fresh investments into technology, boost domestic research and development, and provide excellent opportunities for startups and MSMEs.
About Indigenisation of Defence
Indigenisation in defence refers to the capability to develop and produce any defence equipment domestically. It aims to achieve self-reliance, empower Department of Defence Production’s objective, reduce import burden and encourage innovation.
India stands among the world’s largest arms importers with an estimated spending of about USD 130 billion on defence purchases over the next five years.
Background and Need for Indigenisation
The government has aimed to increase India’s defence industrialisation since mid-1980s due to overdependence on Soviet Union. Despite the efforts, there was a shift towards co-production with foreign companies as indigenous capabilities didn’t suffice for armed forces’ requirements.
This shift amplified in 1998 when India and Russia jointly produced Brahmos supersonic cruise missile. There’s a need for indigenisation as it helps in reducing fiscal deficit, ensuring national security, creating employment opportunities, boosting patriotism, and enhancing strategic capability.
Challenges and Recent Initiatives
Despite the push for indigenisation, challenges persist such as infrastructural deficits, land acquisition issues, policy dilemmas and lack of institutional capacity. To combat these issues, several initiatives have been taken such as increasing FDI limit in defence sector, corporatization of Ordnance Factory Boards, launching of Defence India Startup Challenge and SRIJAN portal.
The Way Forward
To effectively strategize indigenisation, it’s crucial to establish a Permanent Arbitration Cell for dispute resolutions, boost private sector involvement, innovate in software industry, give financial and administrative autonomy to DRDO, improve in-house design capabilities amongst the three services, and nurture a robust supply chain.