Modi claims 'humble beginning' in building defence industry, slams UPA rule

Three years ago in Bengaluru, on February 18, 2015, while inaugurating Aero India 2015 – the first defence exhibition of the Bharatiya Janata Party (BJP)-led government – Prime Minister Narendra Modi outlined an ambitious “Make in India” agenda for defence production.

“We have the reputation as the largest importer of defence equipment in the world. That may be music to the ears of (foreign defence vendors) here. But, this is one area where we would not like to be Number One!” he quipped.

Three years later, inaugurating Defexpo 2018 in Chennai on Thursday, a more sombre Modi would have been conscious that little has changed. India remains the world’s top arms importer. The “additional 100,000 to 120,000 highly skilled jobs in India” that he visualised in Bengaluru – which he would create by “raising the percentage of domestic procurement from 40 per cent to 70 per cent in the next five years” – remains an aspiration.

So Modi focused on the policy positives in a determinedly upbeat speech at Chennai. In what he characterised as “a humble beginning”, he cited progress “on defence manufacturing licenses, on defence offsets, on defence exports clearances, on Foreign Direct Investment in defence manufacturing, and on reforming our defence procurement.”

He said “The defence procurement procedure has been revised with many specific provisions for stimulating growth of domestic defence industry.” In truth, defence industry growth has been anaemic.

A key reason for this lacklustre industrial growth has been conservative, single-digit annual growth in the defence budget. Modi showed some recognition of this when he stated: “We are conscious that defence manufacturing is unique in terms of government involvement. You need the government to grant a license to manufacture arms and ammunition. Since the government is almost the only buyer, you need the government to grant an order. You need the government even to grant permission to export.”

Without domestic off-take, defence industry would have to rely on exports for growth. Here Modi cited figures to claim better performance than the United Progressive Alliance (UPA) government. “In May 2014, the total number of defence export permissions granted stood at 118, for a total value of 577 million dollars. In less than four years, we have issued 794 more export permissions, for a total value of over 1.3 billion dollars”, he stated.

How much of this sanctioned figure has actually been exported is not known.

However, Modi pulled no punches in criticising the UPA government's defence preparedness. “There was a time when the critical issue of defence preparedness was hampered by policy paralysis. We have seen the damage such laziness, incompetence or perhaps some hidden motives can cause to the nation. Not now, Not anymore, Never again”, he declared.

The PM pointedly charged the previous government with apathy towards the jawan, contrasting the BJP’s actions with its predecessors. “You would have seen how the issue of providing bulletproof jackets (BPJs) to Indian soldiers was kept hanging for years. You would have also seen that we have brought the process to a successful conclusion with a contract that will provide a boost to defence manufacturing in India.”

The government recently signed a contract for over 186,000 BPJs, out of the approximately 386,000 jackets that the army alone requires. Earlier, a fast track contract for 50,000 jackets had been concluded by the BJP.

Modi also claimed credit for having “taken bold action to meet our immediate critical requirements [for fighter aircraft], but have also initiated a new process to procure 110 fighter aircraft.”

While earlier tenders, like 2007 one for medium multi-role combat aircraft dragged on without yielding a result, Modi indicated that this one would have a speedy conclusion.

The PM also claimed credit for providing impetus to defence startups across the country. “We have launched the 'Innovation for Defence Excellence' scheme. It will set up defence innovation hubs throughout the country to provide necessary incubation and infrastructure support to the start-ups in defence sector”, he said.

Before leaving Chennai, Modi also witnessed an operational demonstration staged by the seashore in which naval warships, air force fighters and helicopters and army tanks and helicopter-borne commandos displayed their capabilities.