Pushing for ‘Aatmanirbhar Bharat’ , the Ministry of Defence has signed more than 180 contracts with the Indian industry between June 2014 and December 2019, worth approximately $25.8 billion

With India’s defence deals with Russia in jeopardy due to the Russia-Ukraine conflict, the Centre has emphasised a renewed push for indigenous defence equipment manufacturing, asking both foreign and domestic companies to invest in India.

“It is our ‘whole of government’ approach to ensure availability of best weapons, equipment, and clothing to our troops braving extreme weather and hostile forces to defend our territorial integrity,” Defence Minister Rajnath Singh said at the ongoing Army Commanders Conference on Thursday, April 21. He went on to say that the army will grant Indian vendors 40,000 Crore worth of contracts in 2021-2022.

Mr. Singh invited US companies to invest in India in the context of the 2+2 dialogue, saying, “The US-India relationship is built on foundational bilateral agreements, military to military engagements, cooperation in the enhancement of defence capabilities, and now a new emphasis on co-development and co-production.”

What is the Centre’s ‘Make in India’ push in Defence?

Under the ‘Make in India’ scheme, the Ministry of Defence inked more than 180 contracts with Indian industry for roughly $25.8 billion between June 2014 and December 2019, as part of its push for ‘Aatmanirbhar Bharat’ (self-reliant India). By 2024, the Ministry of Defence hopes to have a revenue of Rs 1.75 Lakh Crore in aerospace and defence goods and services, including Rs 35,000 crore in exports.

The Centre has notified three lists of projects under the ‘Make in India’ scheme: Make I (90 percent government funded, with vendor), Make II (prototype development of equipment/system/platform or their upgrades with no government funding), and Make III (prototype development of equipment/system/platform or their upgrades with no government funding) (collaboration with foreign equipment manufacturer for production in India).

Indian Light Tanks, Terminal End Secrecy Device (TESD), Tactical Communication System (TCS), and Futuristic Infantry Combat Vehicle (FICV) are four Army projects in varying phases of development under this scheme. Airborne Electro Optical Pod with Ground Based System, Airborne Stand-Off Jammer, and Communication System with Indian Security Protocols are three other Airforce initiatives. The Make I initiatives are supported by the Centre, are relevant to the needs of the Indian Armed Forces, and are developed in partnership with domestic vendors selected through bids.

These initiatives are concerned with the production of prototypes, systems, and subsystems, primarily as a substitute for imported goods or as innovative solutions. Domestic manufacturers contribute to their funding. Interested Indian enterprises may submit bids based on a preliminary assessment of project particular details provided by the Centre, according to government protocol.

There are now 68 Army, Navy, and Airforce projects that have gotten Approval-in-Principle, as well as seven projects that are in the exploratory stage. Spare components, radar systems, detecting systems, instrumentation parts, and light vehicles are among them.

In October 2020, the Centre also created a Make-III category of projects. Make-III initiatives, like Make-II projects, focus on the development of defence prototypes, systems, and subsystems. These, however, will not be designed or developed in-house, but rather made in India as a substitute for imported goods. An Indian vendor can form a joint venture with a foreign original equipment manufacturer in these projects.

What are the budgetary provisions for ‘Make In India’?

The Union Budget allotted Rs 5.25 lakh crores for defence in fiscal year 2021-22, which is 9.8% more than the previous year’s Budget predictions. Revenue is allocated Rs 2.33 lakh crore, capital is allocated Rs 1.52 lakh crore, while defence pensions are allocated Rs 1.19 lakh crore.

68 percent of capital allocation for new procurement and historical payments has been set aside for domestic industry procurement.

India’s defence and aerospace manufacturing business is currently valued Rs 85,000 crore, with Rs 18,000 crore in private investment. Defence exports will be about Rs 5,711 crore in 2020-21. In 2022, the government wants to invest Rs 1 lakh crore, and by 2047, it wants to invest Rs 5 lakh crore.

What are the key projects under Make in India?

The scheme’s key projects include the establishment of defence corridors in Uttar Pradesh and Tamil Nadu, as well as the testing of indigenous defence products such as the Akash Surface-to-Air Missile System, Dhanush Artillery Gun System, Medium Range Surface-to-Air Missile (MRSAM), Agni-5, BrahMos, Pinaka Mk-I (Enhanced) Rocket System (EPRS) and Pinaka Area Denial Munition (ADM) rocket systems, and the helicopter-launch

A total of 568 Defense Industrial Licenses have been given to 351 companies, with 117 companies spanning 170 licences starting production.

Why the recent push for Make in India?

In the midst of the Russia-Ukraine conflict, India is waiting for the S-400 air defence systems to be delivered in accordance with a deal agreed in 2018. The $5.43 billion agreement is threatened with US sanctions under the CAATSA (Countering America’s Adversaries Through Sanctions Act). In addition, numerous other deals are in the works for the Indian Air Force, including 12 Su-30MKI aircraft and 21 MiG-29 fighter fighters. However, in order to promote domestic manufacture, the Defense Ministry is reviewing all direct import agreements.

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