India, which strives for self-sufficiency in the defense sector, has signed several contracts and authorized several projects to build military capacity with locally produced weapons and systems in less than a month.
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Although this is a major impetus for the Atmanirbhar Bharat (Autonomous India) campaign of the Modi government, doubts remain about the quality of some indigenous facilities.
Give an example to emphasize the need to be autonomous in terms of defense, General Vice President Malik (retired), said that during the Kargil War in 1999, the Indian Army ordered two regiments of 155mm Denel guns from South Africa. However, when the weapons were due to be delivered, they said they did not have them.
To avoid such delicate situations, the indigenization of this crucial sector is essential. It is also the path the current government has taken.
Under the current administration, the Indian Ministry of Defense first imposed an import ban out of 101 military items in August 2020. He then added 108 more items to the existing list a year later to give new impetus to self-defense manufacturing.
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The import ban list includes systems, sensors, weapons and ammunition such as mine protected vehicles, helicopters, mini-UAVs, wheeled armored platforms, tank engines, border surveillance systems, a new generation corvette and anti-tank guided missiles launched from helicopters. among others. Particular attention has been paid to the substitution of imports of certain ammunition.
Speaking to The EurAsian Times, Major General Rohit Gupta (ret’d) said: “It is important to understand that an import ban on military equipment 209 does not imply that the equipment is 100% indigenous. The minimum acceptable Indigenous Content (CI) percentage will continue to be dictated by the procurement category, which ranges from 50 to 60% CI.“
“Some niche technologies are only available in a few select countries. We would need both foreign companies and, in most cases, their government’s approval for the technology. Again, in most cases, the ToT is not given.
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In such cases, 100% indigenization is not possible at this stage and this component will have to be imported and integrated into the complete system with the help of foreign OEMs. Yes, at a later stage we can move towards greater indigenization as our technological thresholds improve, ”added Gupta, currently head of aerospace and defense at Primus Partners.
At the same time, the government has also decided to increase foreign direct investment (FDI) in the defense sector. The idea is to increase national defense production, develop new technologies in India and facilitate private sector growth in defense production.
In a Press note in September 2020, the Ministry of Promotion of Industry and Internal Trade announced the increase of FDI in the defense sector from 49% to 74% according to the automatic channel.
Major-General Gupta (ret) estimated that an increase in FDI of up to 74% directly through the defense sector has the potential to incent foreign companies to invest and manufacture in India. This will allow a full ecosystem of higher tech threshold of native tier 2 and tier 3 vendors to emerge.
A few hurdles like the restriction in the permitted category of supply, for these companies, will need to be addressed to make them a viable investment opportunity.
For the 2020-2021 fiscal year, the Ministry of Defense has also created a separate budget item for domestic capital purchases. It allocated a budget of INR 52,000 crore for domestic purchases. Previously, the budget for capital purchases included both domestic and foreign purchases.
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The Defense Acquisition Process (DAP) 2020 has increased the requirement for Indigenous content across all categories of defense procurement. He also proposed other measures – such as increasing the local availability of high-end military hardware, the use of locally manufactured software in equipment / systems and the stimulation of innovation by start-ups and micro, small and medium enterprises (MSMEs) – to increase indigenization.
Local manufacturers get a boost
In less than a month, New Delhi authorized defense purchases worth nearly ₹ 54,000 crore (approximately $ 7.5 billion). At the end of September, a 22,000 crore (about $ 3 billion) contract for 56 C-295 medium transport aircraft was signed between Airbus Defense and Space and the Indian Ministry of Defense.
This contract, aimed at modernizing the Indian Air Force’s transport fleet, will be executed jointly by Airbus Defense and Space and Tata Advanced Systems Ltd. Spain while Tata will assemble the 40 others in India.
Just a day before the C-295 deal was signed, the ministry had placed an order worth 7,523 crore (around $ 1 billion) with Heavy Vehicles Factory in Avadi, Tamil Nadu. This was a contract for 118 Arjun Mk-1A tanks.
India’s supreme procurement agency, the Defense Acquisition Council, has granted its Acceptance of Necessity (AoN) for defense purchases valued at 13,165 crore ($ 1.7.4 billion) Last week. This particular supply will include 25 state-of-the-art Mark III light helicopters.
“These 54,000 crore of supply will give a boost to the domestic industry and allow it to invest in development, including partnerships with foreign OEMs for higher levels of technology and quality manufacturing sought by defense forces,Said Major-General Gupta (retired).
It was not all smooth sailing. For example, the Indian military’s modernization plan to procure more than 3,000 howitzers by the mid-2020s has encountered problems.
The Advanced Towed Artillery Gun System (ATAGS) and Dhanush Gun that the Army had planned to procure as part of the Field Artillery Rationalization Program (FARP), have encounter problems too.
The challenges of ATAGS begin with its design and development. It suffered major setbacks in recent summer fire tests and was unable to meet certain parameters set by the military. There are issues related to the weight of these guns that also need to be addressed. The ATAGS will have to undergo further modifications.
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Dhanush’s enthronement began in April 2019. However, in 2019-2021, only 12 of the long-range artillery guns were delivered. To constitute a complete regiment, 18 guns are necessary.
On the bright side, the K9 Vajra howitzers, manufactured as part of a joint venture between Indian company L&T and a consortium of South Korean companies, have been the most successful to date.
India plans to purchase more of these tracked weapons for its military. M-777 guns manufactured by BAE Systems in the United States were assembled in India by Mahindra Defense. Deliveries have been delayed due to the pandemic.
“The strategic partnership path is the way to go for all major equipment purchases. It guarantees the selected national company the return on its investments, allows financing, improves R&D and technological links with foreign equipment manufacturers are facilitated on the GtoG route. government. The Tier 2 & 3 eco-system, supplying the contracted company, is also facilitated with insured orders,“according to Gupta.
“Although there have been slippages in defense procurement in the past, with corrective measures put in place by the Defense Ministry, we are optimistic that the domestic defense sector will see growth. The road to indigenization will not be easy, but in the long run it will serve the army and the nation well in their efforts to modernize and achieve self-sufficiency,», Declared the general before signing.