AN ARTICLE BY KAVITA NAGPAL
It is a known fact that to have a robust DIB, it is essential for any country to have a strong and active private sector in defence manufacturing as well as R&D. In India, however, this has not been the case with which has always prioritized the Public Sector – Ordnance Factories, Defence Public Sector Undertakings and DRDO & its Labs despite their underperformance at times, due to the so-called ‘deep-set security concerns’.
Indigenous defence production or Defence Industrial Base (DIB) is the essential components of long-term strategic planning of any country. For India, the heavy dependence on imports is not only alarming from the perspective of strategic policy, but is also a matter of concern from the economic point of view in terms of the potential for growth and employment generation.
Recently as per a recently released report by Stockholm International Peace Research Institute (SIPRI) in March 2023, India has again emerged as the top importer of military equipment in the world accounting for 11% of global arms imports between 2018 and 2022. Rather, as per the SIPRI data, India has been the largest importer of military equipment for more than 30 years.
Keeping in mind the continued dependency of imports, the Government has undertaken a series of policy and process reforms in order to promote indigenous design, development, and manufacturing of defence equipment within the country.
And, in this regard the opening of the defence sector for private sector participation in 2001 can be said to be one of the first major initiative/policy from its end. However, its commitment to a level-playing field falls flat in the absence of concrete / substantial orders to private sector.
Private Sector in Defence Manufacturing: India Vs Advanced Countries
It is a known fact that to have a robust DIB, it is essential for any country to have a strong and active private sector in defence manufacturing as well as R&D. And even globally mostly the private sector is seen to be the mainstay of the defence production.
Rather, in advanced countries such as US, Israel, China, defence production is dominated by a private companies backed by a plethora of small firms. They have long term partnerships with their governments in both production and Research & Development (R&D).
This is one of the reasons these countries have been able to develop a strong and capable DIB and consequently able to manufacture sophisticated world class military hardware. Further, these countries have also been able to successfully harness the energies of the private sector for R&D.
The most well-known example is the Defence Advanced Research Projects Agency (DARPA) of the US Department of Defence which created a transformational innovation ecosystem in partnership with the private sector with regulatory control over Intellectual Property Rights (IPR) and export.
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In India, however, this has not been the case with which has always prioritized the Public Sector – Ordnance Factories, Defence Public Sector Undertakings (DPSUs) and DRDO & its Laboratories despite their underperformance at times, due to the so-called ‘deep-set security concerns’.
These government financed and protected production agencies has been unable to meet the military needs all by themselves. Even when defence products are manufactured domestically by them, there is a large import component in them.
This situation can only be averted if the government put more impetus on involving the private sector to compete in future defence programmes rather than being biased towards the Public Sector entities.
Emergence of Competent Private Sector
Undoubtedly, the private sector companies, seems to have potential and have started giving a tough competition to the Government sector entities. These companies have proved their mettle and even in the sphere of defence exports the share of these entities is witnessing a growth every year.
As on date, approximately $3 billion worth of defence items are being manufactured by the domestic private sector.
Considering the last few years, the Indian private sector is considered to have matured sufficiently both in terms of size and scale of operations as well as in technology development through partnership, adaptation, and assimilation capabilities, making it more capable than ever before.
This is evident from the fact that certain private companies have demonstrated capability such as Pinaka development by Tata Power SED and successful manufacturing of K-9 Vajra Artillery Guns and M-777 ULH by Larsen & Tourbo (L&T) and Mahindra respectively through partnership with OEMs South Korea’s Hanwha and US BAE Systems.
However, its share in the total defence production of the country continues to remain poor. Noteworthy, Indian defence industry output is approx worth Rs 68,019 Crores (2022-23), of which the private sector production is merely approx Rs 13,991 Crores while the public sector produced equipment is worth Rs 49,744 Crores.
To read this latest DS BLOG further, click on: https://thedefencespace.com/private-sector-in-defence-a-ray-of-hope/
