In murky geopolitics, regional tensions, New Delhi stresses on self-reliance

Indian Air Force's aerobatic team Sarang perform maneuvers on the fourth day of the Aero India 2023 at Yelahanka air base in Bengaluru. (Source: AP)

In the era of atmanirbharta or self-reliant production in the defence sector, pushing up indigenous exports is a natural corollary. The Aero India 2023 air show at Bengaluru offered a glimpse of this road ahead.

On February 15, defence minister Rajnath Singh unveiled this twin ambition. At the Aero India show, Asia’s biggest military air exhibition, he said that India has earmarked 75 percent of this year’s defence capital procurement budget for buying weapons and systems from local manufacturers ― this push is aimed at unlocking new opportunities for achieving self-reliance targets and ramping up the country’s defence exports.

The share of the domestic sector in the defence budget has been benchmarked high. India set aside 68 percent of the military’s capital acquisition budget for making indigenous purchases in 2022-23, 64 percent in 2021-22, and 58 percent in 2020-21.

In the Union Budget announced on February 1, India earmarked Rs 5.94 lakh crore for defence spending in 2023-24, with the allocation almost 12 percent higher than that of the previous year’s budget estimates, and about 2 percent more from the revised estimates for 2022-23.

India allocated Rs 5.25 lakh crore for military spending in last year’s budget, Rs 4.78 lakh crore in 2021-22, and Rs 4.71 lakh crore the year before.

Around Rs 1 lakh crore has been set aside for domestic procurement this year, pitched against Rs 84,598 crore, Rs 70,221 crore and Rs 51,000 crore in the three previous years.

Major pacts signed

Consider the principal highlights of the 201 Memorandums of Understanding (MoUs), 53 major announcements, nine product launches and three transfer of technology (ToT) accords, at Aero 23:

• Hindustan Aeronautics Limited (HAL) Chairman, CB Ananthakrishnan, told reporters on the side-lines of the meet that India is in talks with Egypt and Argentina for a possible supply of Tejas light combat aircraft (LCA). The HAL chairman said that Egypt has shown interest in 20 Tejas aircraft, while Argentina has a requirement of 15 fighter jets.
• Bharat Electronics Ltd and Aeronautical Development Agency inked an MoU for development of the Advanced Medium Combat Aircraft (AMCA).
• The product launches at Aero India included the vertically-launched short-range surface-to-air missile (Bharat Dynamics Limited). It is a next-generation, ship-based, all-weather, air defence weapon, which can be used by the navy as a quick reaction defence against supersonic sea skimming targets, such as aircraft and unmanned aerial vehicles (UAVs).
• Another significant product launch was the semi-active laser seeker-based anti-tank guided missile developed by Bharat Dynamics Limited. The missile weighs 23 kg with the launch tube and can be used in different kinds of terrains to incapacitate moving and stationary targets, such as tanks and infantry combat vehicles.
• HAL and Safran Helicopter Engines, France, inked an MoU to form a joint venture for the design, development, manufacture, and lifetime support of helicopter engines.
• British aerospace company, BAE Systems, and Indian aviation training institute, FSTC, announced plans to design, build and supply simulators to train pilots of the Indian armed forces.
• Indian multi-national Bharat Forge Ltd and South Africa’s Paramount Group signed an MoU for development and production of rotor blades, mission systems and stores management systems for medium-lift helicopters.
• In November last year, Indian defence firm Kalyani Strategic Systems Limited won an export order worth $155.5 million to supply artillery guns to a friendly foreign country, the first such order clinched by a local company for the 155mm weapon system.
• This came on the back of the Philippines ordering BrahMos missiles and Armenia choosing to buy Pinaka multi-barrel rocket launchers from India.
• HAL may also export the advanced light helicopter (ALH) to the Philippines.
• In December 2020, the Union cabinet gave its go-ahead for the sale of Akash missile systems to friendly foreign countries. It also created a high-powered panel for swifter approvals to export military hardware.

To underline the point, Indian Air Force (IAF) Chief, Air Chief Marshal VR Chaudhari, flew the LCA during the inaugural display at Bengaluru’s Yelahanka air base at a time when India is aggressively looking to tap the aircraft’s export potential, and the air force also plans to induct its newer versions to boost combat strength.

India has set a defence exports target of $5 billion by 2025. By far, one of the world’s largest importers of military hardware for decades, India is now exporting defence equipment to 75 countries, and is on course to increase its sales from the current $1.5 billion to $5 billion by 2024-25.

Air Vice Marshal Arjun Subramaniam (Retd) told Moneycontrol, “If India aspires to be a global power, it needs to have a military industrial complex. Thus far, India has had collaborative ventures, a one-way acquisition traffic based on licenced agreements, but not on transfer of technology. That is changing.” He added, “India’s clout and power have the wherewithal to achieve this status.”

Significantly, three transfers of technology (ToT) pacts worth around Rs 80,000 crore were inked at Aero 23, the Ministry of Defence (MoD) said in a statement.

Apart from exports, the country’s internal needs have been taken into count. A proposal to design and develop an indigenous deck-based fighter for the Indian Navy is soon likely to be taken up by the Cabinet Committee on Security, with the Navy’s requirement expected to touch around 100 aircraft, officials at the air show said.

Girish S Deodhare, Director General, Aeronautical Development Agency, told the media at Bengaluru that the first prototype of the twin-engine deck-based fighter (TEDBF) could make its maiden flight by 2026 and be ready for production by 2031.

The Navy is looking at importing a new deck-based fighter as an interim measure to meet its requirements before the indigenous TEDBF is ready. HAL will produce the new fighter at the rate of eight aircraft per year.

Right next came the Indian Army’s plans. The army aims to buy a mix of 200 utility and combat helicopters to meet its operational requirements, with the platforms set to be produced in the country, Army Chief, General Manoj Pande, said in Bengaluru. In his estimate, the army needs around 110 light utility helicopters (LUH) and 90 to 95 light combat helicopters (LCH) to be built by HAL.

The army chief’s comments came days after PM Modi inaugurated the country’s largest helicopter manufacturing facility at Tumakuru in Karnataka, in what is being seen as a shot in the arm for self-reliance.

The new HAL factory, spread across 615 acres, will initially produce the LUH, followed by LCH and later the Indian multi-role helicopters (IMRH).

Wrote Air Marshal Anil Khosla (Retd), a former IAF Vice Chief, in a newspaper column, “The IAF has always played an important role in creating an aerospace ecosystem in India. It has been operating indigenously-built aircraft and aircraft built in India under licence production. This has given impetus to indigenous industry in the past.”

Apart from creating a separate budget for buying locally-made military hardware, the government has taken a raft of steps to promote self-reliance in the defence manufacturing sector, including increasing foreign direct investment (FDI) from 49 to 74 percent, and notifying hundreds of weapons and systems that cannot be imported.

Officials said that India could bring more weapons and systems under an import ban and manufacture them in the country to give a new push to self-reliance, with the latest ‘positive indigenisation list’ set to come on the back of four similar lists that have barred the import of 411 military items during the last 30 months.

The first four lists announced in August 2020, May 2021, April 2022, and October 2022, have imposed a phased import ban on weapons that are planned to be indigenised over the next five to six years, creating more opportunities for the domestic sector.

Weapons and systems, which cannot now be imported include artillery guns, missile destroyers, ship-borne cruise missiles, light combat aircraft, light transport aircraft, long-range land-attack cruise missiles, basic trainer aircraft, multi-barrel rocket launchers, a variety of helicopters, assault and sniper rifles, mini-unmanned aerial vehicles, next-generation corvettes, and airborne early warning and control (AEW&C) systems.

Military hardware sought to be developed locally range from light tanks, naval utility helicopters and mounted artillery gun systems to medium-altitude long endurance unmanned aerial vehicles (UAVs), missiles, and loitering munitions. Import substitution of ammunition, which is a recurring requirement, has been given special emphasis in the previous lists.

As part of self-reliance, the government launched the ninth edition of the Defence India Startup Challenges on cybersecurity. A drone tech start-up at the fair, TSAW Drones, celebrated its ‘Made in India’ product. Kishan Tiwari, its founder & CEO, aspires to take the flight of drone innovation, technology & manufacturing to a horizon that would help it become the “world’s top drone company and make India a global drone hub”.

However, there is little doubt that the road ahead is complex and very long, mainly because India’s defence technology is at a rudimentary stage. Says Air Vice Marshal (Retd) Manmohan Bahadur, a defence columnist and expert, “Aatmanirbhar or self-reliance in defence is a good step, but it will take time. As a professional, I can say that it could take a decade or more.”

He told Moneycontrol, “How can India acquire technology? No country will part with niche defence technology. So, it is important that we develop niche technology within the country and here the diplomatic community has a big role to play. How we do it is our lookout.”

In contrast, said Bahadur, “The Chinese have obtained technology through reverse engineering; they have sent their students to the US to do quality research at reputed universities, and those researchers have come back. Then there are cases of economic espionage in which the Chinese are involved. They have managed to acquire technology that India has not. It is a question of vision."

A 2022 study by the Stockholm International Peace Research Institute (SIPRI), which assessed self-reliance in arms production, concluded that India stood at the fourth position among 12 countries of the Indo-Pacific in self-reliant defence production.

Despite long-term efforts, India remains one of the largest importers of major arms globally. Between 2016-20, it was the second-largest importer, the study said.

"India’s domestic arms companies provide only 16 per cent of its total procurement. However, the significant arms sales of local firms and the high level of licensed production push India to fourth position in the list. This should be put in perspective the fact that India is the second-largest military spender in the region, after China," noted SIPRI.

It said that India is highly dependent on import of complete foreign major arms, including many produced under licence or as components for its domestic production. "Of India’s total volume of procurement in 2016-20, 84 percent was of foreign origin," the report said.

Clearly, it is a mountain to climb, but a beginning has been made. Much would now depend on the country’s arms procurement laws, which are mired in red tape. To set this right, there is a need for political will as well as the stark realisation that there are no shortcuts in this business.