The Indian military is becoming self-reliant
It’s not the cutting-edge weaponry like the M-1 Abrams tank and F-16 fighter jets that could tilt the scales for Ukraine against Russia in the ongoing conflict. Rather, it’s the unassuming artillery shells. Currently, Russia unleashes approximately 10,000 shells daily, dwarfing Ukraine’s output of just 2,000 per day. The production disparity is stark: Russia churns out about 250,000 artillery munitions monthly, totaling roughly 3 million annually, while the combined capacity of the US and Europe reaches only about 1.2 million munitions annually for support to Ukraine, according to a recent CNN report.
As a senior NATO official informed CNN, the conflict between Russia and Ukraine has morphed into a “production war,” where victory is increasingly contingent on artillery shells rather than sophisticated armaments.
India had anticipated such a scenario years ago when it embarked on an extensive journey to indigenize its defense manufacturing. Now, it stands on the cusp of self-reliance across numerous fronts. Notably, the army aims to halt ammunition imports from the next fiscal year, given the domestic industry’s heightened capacity to meet all demands and potentially secure a share of the global market, as per a senior procurement officer’s statement.
India’s march toward defense self-sufficiency encompasses more than just ammunition. The nation now manufactures even intricate weapons systems domestically. Three months ago, Amit Satija, Director (DIP) at the Department of Defence Production, revealed that India has indigenized 2,920 defense items out of the listed 4,666, spanning assemblies, sub-assemblies, raw materials, critical spares, and components. Additionally, Air Chief Marshal VR Chaudhari stated that the Indian Air Force (IAF) has indigenized over 60,000 components in recent years.
This drive for indigenization stems from Prime Minister Narendra Modi’s ambitious “Make in India” initiative. In 2015, the government greenlit a record 56 licenses, enabling major players like Mahindras, Tatas, and Pipavav to establish production units—a stark contrast to the previous administration, which approved just 47 projects over three years.
The preceding United Progressive Alliance government introduced an ‘offsets policy,’ mandating overseas companies winning Indian military contracts to invest at least 30 percent of the contract value in the local defense or aerospace industry. However, most projects languished in bureaucratic hurdles. In 2017, the policy underwent revisions, offering foreign firms greater flexibility in selecting local partners and assigning work. These changes unfroze $3.5 billion in foreign investments previously stalled by stringent offset policy clauses.
In alignment with the Atmanirbhar Bharat (self-reliant India) initiative, the government made the historic decision to transform the Ordnance Factory Board (OFB) into seven new 100% government-owned corporate entities with professional management. Previously, the 41 ordnance factories, under the OFB, struggled with losses and poor performance. However, within the first six months of operation, six of the seven new defense companies reported provisional profits, signaling a turnaround.
In 2020, the Ministry of Defence (MoD) formulated a list of 101 items earmarked for indigenous production, subsequently expanding to 98 military hardware items last year, up from 411 across four previous lists. Concurrently, the Department of Defence Production issued four positive indigenization lists, totaling 4,666 items.
Micro, Small, and Medium Enterprises (MSMEs) and startups have emerged as pivotal partners in this journey. While big players like Tata and Adani are integral to defense production, the government actively encourages smaller entities. As of December 2023, approximately 433 startups, MSMEs, and individual innovators were engaged in defense production, with 302 contracts signed for various projects.
In 2018, Prime Minister Narendra Modi launched the Innovations for Defence Excellence (iDEX) framework, fostering innovation and facilitating technology adoption. The government aims to nearly triple India’s annual defense production to Rs 3 lakh crore by 2028-29, with defense exports targeted to surpass Rs 50,000 crore, up from Rs 21,083 crore presently.
According to a Jefferies report, with India’s domestic defense opportunity estimated between USD 100-120 billion over the next 5-6 years, the sector anticipates a visible 13 percent industry Compound Annual Growth Rate (CAGR) from FY23 to FY30.
The forthcoming fiscal year’s plan to exclusively produce all ammunition domestically marks a significant milestone in India’s ambitious defense production agenda. A consistent growth trajectory could lay the groundwork for India to nurture its own Raytheons and Lockheed Martins within its military-industrial complex.
Credit: ET News
