Curbing defence imports

Protection should not compromise quality

For almost three years now, the Ministry of Defence (MoD) has been promoting aatmanirbharta (self-reliance) in acquiring military equipment by placing incremental curbs on importing specified weapons and defence kits. In December 2020, the MoD first instituted curbs on importing line replacement units (LRUs), sub-systems, assemblies, and spares and components of specified defence systems. From the end of that year, 69 types of equipment could no longer be imported. In March 2022, additional equipment types came under the import ban, and the curbs on import were further expanded in August 2022. These lists were given a gloss of positivity by terming them “positive indigenisation lists”, or PILs. With a fourth PIL of 928 “strategically important” items promulgated on Sunday, these lists now contain 2,500 items that have already been indigenised and another 1,238 that will be indigenised within stipulated time lines. According to the data submitted by the MoD to Parliament, these measures are having an effect: Defence imports, which constituted 46 per cent of capital expenditure in 2018-19, constituted only 36.7 per cent of it in the year ended December 2022.

The indigenous defence industry, however, raises three important questions on the notion of protecting domestic defence manufacture through PILs. First is the argument that it is cheaper — or, at any rate, it should be — to design, develop, and manufacture defence products in India. If that is the case, why is there a need to protect domestic industry by banning imports? The MoD says a key intention of this import embargo is to provide an assurance to Indian defence manufacturers that they will compete on a level playing field while designing, developing, or manufacturing defence equipment with their own capabilities or with technologies obtained from the Defence Research and Development Organisation (DRDO). The private defence industry has, often in the past, expended money and design effort on developing a defence product, only to see the MoD import it from the global market instead. An import embargo on specific products would provide assurance against such an eventuality. The Defence Procurement Procedure of 2020 already provides a layer of assurance against such an eventuality through the stipulation that a product that is “India designed, developed and manufactured” would be prioritised for acquisition over any other category. Now, there will be additional protection from PILs.

A second question is whether the protection a PIL provides affects defence preparedness because of quality and timing issues. In the case of several defence systems and weapons platforms in the past — such as the Arjun tank, the Tejas fighter aircraft, the Dhruv light helicopter, and the Project 15A and 15B destroyers — the indigenous project has been unduly protected from global competition, leading to time and cost overruns, which might never have taken place had the project been exposed to the stormy winds of global competition. The final question that arises is whether PILs are a suitable method of increasing indigenisation. As brought out above, it has taken almost 15 years to increase by 10 per cent the indigenous content of the weapons systems bought by India. As the sophistication level of a platform or equipment increases, raising indigenisation levels becomes increasingly difficult. Thus, given India’s dependence on imports, the idea of indigenisation cannot be faulted, but the MoD must make sure the process is not at the cost of military preparedness.