India's private sector will benefit significantly from India's defence production plans. The government envisions defence production to cross ₹1.5 lakh crore in FY24, and exports to surpass ₹20,000 crore. The future focus of the Narendra Modi government is to encourage the development and production of emerging technologies, said Giridhar Aramane, India's Defence Secretary, exclusively to CNBC-TV18.
Here are the top takeaways from the interview:
Defence capital spending set to get a boost:
The Defence Secretary told CNBC-TV18 that the capital outlay for acquisitions and modernisation could increase by 5%-7.5% in the upcoming budget. The government had cleared acquisition proposals worth ₹3.5 lakh crore in 2023.
Aramane also said that there would be no shortfall in government spending on acquisitions or research and development (R&D), and the finance ministry is ready to support all the needs of the defence ministry, depending on the pace of manufacturing.
Boost to defence private sector companies:
India's defence production crossed ₹1 lakh crore in FY23, and exports crossed ₹16,000 crore. Aramane said that in FY24, he expects defence production to cross ₹1.5 lakh crore and may even reach the target of ₹1.75 lakh crore. Exports are on track to cross the ₹20,000 crore mark. Additionally, 45% of new orders are likely to go to the private sector.
New defence schemes on the card:
The secretary said the government would soon come out with a new scheme aimed at the private sector. The purpose of this scheme would be to encourage the development of emerging technologies in the defence sector.
"Recent wars have shown how huge platforms like submarines, fighter jets, and warships can be neutralised by low-cost drones. This has highlighted the need to strengthen defence with the cheapest possible solutions. We need the private sector and new age companies to work on drones, UAVs, electronic warfare, improve air defence, and ground mobility," he said.
The secretary also said that defence forces would have been able to prevent the loss of lives in Jammu and Kashmir if there had been cutting-edge foliage-penetrating radar.
Privatisation of defence PSUs
The government will not rush into divestment of BEML. In 2016, the cabinet had cleared divestment of a 26% stake in government-owned BEML. "We are in talks with DIPAM and will wait for an opportune time for divestment. We will not rush into short-changing BEML, a family silver for short-term gains. We cannot give a timeline at this stage," said Aramane.
The secretary also highlighted that the government may consider divestment of shipbuilding PSUs to meet their future capital requirements for infrastructure.
Plan to export Tejas MK1A fighter aircraft:
The secretary confirmed that the Indian Air Force is set to receive the first Tejas Mk1A fighter jet by February this year. The government is also actively promoting the jet with friendly countries for exports.
The government is still holding talks with Nigeria to export the Tejas fighter jet. Aramane said that the India is willing to offer Tejas at a competitive price to friendly nations and tailor the equipment according to the needs of the prospective buyer nation.
Impact of two wars on India's security needs:
The Russia-Ukraine war and the war between Israel and Hamas have created a global insufficiency in the defence industry, as both Israel and Russia are major suppliers of defence equipment to all nations.
"The Make in India program has come in handy; we were preparing for this situation for the last ten years. We have managed to mitigate the shortfall in defence supplies with the help of our own domestic industry," said the Defence Secretary.
He further added that rather than going completely alone, India will follow a policy of mutual co-dependence and self-reliance. The government is working on several technologies and is considering collaboration with friendly countries.
GE-HAL deal and S400 air defence system:
The secretary said both GE and HAL will soon sign a manufacturing agreement, and the deal is very much on track. He also added that the government does not see any hurdles in the delivery of the S400 air defence system from Russia.
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