The efforts of Modi government to promote domestic manufacturing in defense sector have saved millions of dollars. The heavy defense equipment which were imported earlier are now being manufactured by public and private sector companies like DRDO, Reliance Defense in the nation itself. The Defense Procurement Policy of 2016 introduced ‘Indigenously Designed Developed & Manufactured’ provision (IDDM) to promote ‘Make in India’ in the sector. The ‘Make’ procedure is for both, the government funded manufacturing and industry funded manufacturing with provisions for MSME. The offset policy was also tweaked to allow easy transfer of technology and enhance domestic manufacturing. The draft of Defense Production Policy, 2018 aims to make India a manufacturing hub of defense equipment. The focus of DPP-2018 will be to invest adequate sources to develop critical technology for manufacturing state-of-the-art military equipment including fighter jets, attack helicopters etc. According to the draft policy, the Modi government is looking to achieve a turnover of Rs 1.7 trillion (Rs 1, 70,000 crores) in military goods and services by 2025.
In last few years, the indigenous manufacturing of defense equipment has exponentially moved northwards. The contracts won by public sector defense manufacturer, Defense Research and Development Organization (DRDO) for the development of heavy weapons have notched the million-dollar mark. The new private companies which have been popping up since the liberalization of defense sector also won many contracts. As per a report, the emphasis on domestic defense manufacturing has saved foreign exchange worth Rs 1 lakh crore in last few years. In the last two years, DRDO has built a total of six air defense and anti-tank missile systems with many more projects currently under its consideration. All three defense ministers under Modi government- Manohar Parrikar, Arun Jaitley and Nirmala Sitharaman prioritized the procurement of indigenously built equipment over foreign imports.
Earlier, the parts of missile systems, submarines etc. were built in India but most of the technology intensive equipment came from western countries like United States, Russia, France, and United Kingdom. The top ranking officials in defense services previously preferred foreign made arms and ammunition over domestically manufactured ones. But now the heads of three services of Indian Armed Forces back the indigenous manufacturing and have agreed on giving time and resources to domestic companies and research organizations like DRDO, Reliance Defense in order to develop world class equipment with cutting edge technology. The projects awarded to DRDO in last few years include Anti-Tank Guided Missile (ATGM), helicopter-launched anti-tank guided missiles, Quick Reaction Surface to Air Missile (QRSAM) for Army, Short Range Surface to Air Missiles (SR-SAMs) for the Navy and Army, and armored vehicle launched anti-tank missiles for the ground force.
Earlier, the Indian Navy sought to purchase Short Range Surface to Air Missiles (SR-SAMs) from foreign manufacturer preferably European nations which are good at manufacturing this equipment. However, DRDO proposed to manufacture short range defense missile which went on to save foreign exchange worth INR 30,000 crore. The SR-SAMs for the Army which the country planned to buy from Russia, Sweden, or Israel will now be manufactured by DRDO itself. This also saved foreign exchange worth INR 20,000 crore for the country.
India has accumulated a foreign exchange reserve worth USD 400 billion. The foreign exchange saved on these projects could help the country to strengthen its position internationally. If India builds a robust domestic defense manufacturing industry, it would be able to export equipment to other nations along with fulfilling its own needs.