Here is how India can turn into an arms manufacturing powerhouse

At the 21st Indo-Russian Summit held on Monday, Prime Minister Narendra Modi and Russian President Vladimir Putin met and announced the decision of procurement of over 6 lakh AK-203 assault rifles, which will become the standard piece of equipment for the army. The manufacturing will take place in Amethi, Uttar Pradesh. The project will likely be implemented by a special purpose Joint Venture called Indo-Russian Rifles Private Ltd (IRRPL) and Munitions India Limited (MIL) alongside Rosoboronexport (RoE) and Kalashnikov of Russia.

With this announcement, the Modi government has shown that it is serious to become a net exporter of arms, after self-sustaining itself. The recent slew of reforms suggests the same as well.

India exported over Rs 38,000 crore worth of arms in the last seven years:

A possibility that was relatively unexplored by the previous government regimes, the Modi government has focused on exporting arms and ammunition developed indigenously in the country to other nations. In the last 7 years, India has exported defence items worth more than ₹38,000 crore

PM Modi at the DefExpo last year had stated, “In 2014, the export of defence equipment from India was about Rs 2,000 crore. In the last two years, it has gone up to Rs 17,000 crore. In the next five years, our target is to increase exports to $5 billion, which is about Rs 35,000 crore.”

In October this year, PM Modi gave an update and remarked, “Our defence exports have increased by 325 percent in the last five years. It is our target that our companies not only establish expertise in their products but also become global brands,”

The reformist approach:

The government has taken steps to bring about de-licensing, de-regulation, export promotion and foreign investment liberalisation. To meet export requirements, a draft Production and Export Promotion Policy (DPEPP) 2020 has also been formulated.

With the success of Production Linked Incentive (PLI) schemes in different sectors of the economy, it wouldn’t be hyperbole to suggest that the government might be planning something on the same lines for the defence sector.

The government has already approved the scheme for the procurement of drones and drone components which will offer tremendous benefits to almost all sectors of the economy. These include– agriculture, mining, infrastructure, surveillance, emergency response, transportation, geo-spatial mapping, defence, and law enforcement to name a few.

The dedicated defence corridors:

Moreover, with the centre’s recent announcement to establish defence corridors in Uttar Pradesh and Tamil Nadu to become ‘Aatmanirbhar’ in the manufacturing and service of aerospace and defence equipment, the endeavour has been given a major boost. The move to build the corridor will benefit 200 Indian firms, with employment opportunities for around 8,000 people.

Read More: As India strives to become a defence manufacturing hub, Tamil Nadu and UP lead the charge

The defence corridor plan in the southern state has been identified in Chennai, Trichy, Salem, Hosur and Coimbatore as areas of focused development. Tamil Nadu has also unveiled an exclusive Aerospace and Defence Industry Policy back in 2019. The Combat Vehicles Research & Development Estt (CVRDE) in Chennai is the main DRDO lab involved in the development of Armoured fighting vehicles, Tanks, Automotive electronics and many others.

Meanwhile, Uttar Pradesh has emerged as the top investment destination; companies from the United States, the United Kingdom, Japan, Canada, Germany, and South Korea have shown interest in setting up their manufacturing units/corporate offices in the state and have proposed investments worth 45,000 crore rupees which will create 1.35 lakh jobs in the state.

Meanwhile, according to Defence Minister Rajnath Singh, around 12,000 MSMEs have already joined the defence industry due to the government’s initiatives. The current regime is not unwilling to use private companies to realize its dreams.

Rajnath Singh remarked, “We have an estimated ₹85,000 crore industry of aerospace and defence. The contribution of the private sector in this has increased to ₹18,000 crore,”

Three Indian companies in the top-100 list of global arms export:

According to reports, three Indian arms companies have already broken the glass ceiling by entering the top-100 list of arms sales globally. In the report compiled by the Stockholm International Peace Research Institute (SIPRI), which tracks global arms trade, Hindustan Aeronautics Limited (HAL), Indian Ordnance Factories, and Bharat Electronics Limited (BEL) have found themselves on the list.

HAL is at number 42 with US$ 2.97 billion, up 1.5 per cent from 2019 sales. Indian Ordnance Factories are at the 60th spot, with US$ 1.9 billion in sales, up 0.2 per cent from the previous year. BEL is ranked 66, with US$ 1.63 billion in arms sales, up 4 per cent compared to 2019.

It is pertinent to note that the government converted the OFB into seven 100 per cent government-owned corporate entities as a measure to improve self-reliance in the defence preparedness of the country.

The post-independence government restricted the entry of private players in the strategic sector like defence equipment manufacturing, and the meagre resources were put to white elephant companies like HAL and OFB. However, the government with its restructuring plans is slowly but steadily starting to utilize the capabilities of the aforementioned companies.

Read More: The restructuring of the Ordnance Factory Board will turn India into a defence powerhouse

As reported by TFI, the government is increasingly looking up to the private sector which is reposing the faith by delivering the goods on time.

In August, the Indian government granted Indian auto giant Mahindra & Mahindra Ltd and its subsidiary Mahindra Defence Systems Limited (MDS) a contract worth Rs 1,349.95 crore for the manufacturing of Integrated Anti-Submarine Warfare Defence Suite (IADS) for modern warships of the Indian Navy.

Just like Mahindra & Mahindra, another private indigenous firm named Economic Explosives Limited (EEL) reposed the faith shown by the government and delivered the first batch of India-made multi-mode hand grenades (MMHG).

The development of the grenade was made possible following the transfer of technology from the Terminal Ballistics Research Laboratory of Defence Research & Development Organisation (DRDO). The government is aggressively batting on the front foot. From reforming the procurement ecosystem to indigenizing and supporting MSME and start-ups to promoting innovation and R&D – it is ticking all the boxes at the moment.