Indigenous defence manufacturing ecosystem has received a fillip from the government
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Indigenous defence manufacturing ecosystem has received a fillip from the government
Kishore Jayaraman

Kishore Jayaraman As India continues on its trajectory of growth, establishing itself as a major player in the global geo-political environment, it needs to take cognisance of the fact that the threats surrounding the country have also evolved. Today, India is confronted by a complex combination of external and internal issues that has a direct impact on the economic ambitions of the country.

India’s current military hardware needs to be upgraded to tackle the operational demands of today. With the Indian Air Force (IAF) planning to retire its ageing fleet and Indian Navy increasingly asserting its dominance as a blue water navy, there is an urgent need to speed up modernisation and upgrade the fleet size and capabilities. This has further led to a growing realisation that it is imperative to reduce import dependence of modern military hardware and create an ecosystem to promote indigenous defence manufacturing.

Increasing momentum
The Indian defence industry is witnessing a strong growth, aided by the government’s focus on fleet modernisation as well as key policy reforms and initiatives. Reviving indigenous projects, fast-tracking the purchase of critical platforms and hardware and easing the business environment in the defence production sector have been the key areas of thrust.

Realising the urgency for self-reliance across sectors, a top-priority for the government has been the development of indigenous defence manufacturing ecosystem. As such, the government has taken a host of steps to propel the sector towards a desired level of maturity and growth. The move to allow 100 per cent Foreign Direct Investment (FDI) in the sector was unprecedented. This, coupled with the recently launched Defence Procurement Policy (DPP) is seen as a game-changer. While FDI makes it easier for Original Equipment Manufacturers (OEMs) to do business in the sector, the DPP will ensure a faster procurement procedure through the newly introduced categories with the provision of indigenously designed, developed and manufactured (IDDM). This has caused the sector to see renewed growth with OEMs looking at India with a fresh lens as a preferred market and destination for manufacturing defence products.

Modernisation through an indigenous approach offers immense opportunities for all the stakeholders involved. OEMs and Indian private players are already in the process of evolving their relationships. The focus is now on graduating from a seller-buyer combination to one that revolves around co-development and co-manufacturing. While OEMs bring the technological know-how to the table, Indian partners come with deep understanding of the dynamics of the indigenous market. This creates a win-win opportunity for all the parties involved that offers tremendous opportunities across spectrum of sub-sectors that are needed to form a robust indigenous defence manufacturing ecosystem.

Emerging a winner
While the initial steps towards the creation of an indigenous defence manufacturing ecosystem has already been taken, there are still a few areas that can be addressed for the sector to emerge as a winner:

• Speeding up the process: For a robust indigenous defence manufacturing ecosystem, it will be necessary for the sector to quickly bring itself up to speed in terms of technology. While significant steps have already been taken in this direction a route of co-development and co-manufacturing would be the ideal to achieve the goal of evolving India into a high value defence manufacturing hub to cater to domestic needs and export needs
• Infrastructure improvement: There is a marked lack of necessary infrastructure which increases costs, reducing competitiveness. The government has shown cognisance of this fact and is actively investing in developing infrastructure to considerably plug this gap. Public-private partnership can hasten this process to create the infrastructure in tandem with manufacturing growth
• Building skills: Reports indicate that an estimated reduction of 20-25 per cent on import dependence can directly create the requirement of an additional 100,000 to 120,000 highly skilled jobs. This calls for creating the requisite training facilities and the right teaching curriculum such that the talent is industry ready to perform at their optimal level
• Engaging with academia: To encourage innovation and technological growth in the field, academia and industry will need to forge partnerships to ensure that the industry has the necessary R&D skills to bring about step-change innovation
• Defined roadmap: The indigenous defence manufacturing sector will also need to keep in mind that production does not outrun the demand. A clear, consolidated roadmap of hardware requirements in the mid to long term would aid the sector to scale production to match domestic requirements.

It is well established that creating indigenous manufacturing capabilities in defence will have long-term benefits by way of reducing dependencies, however, what is also critical is the trickle-down effect in terms of socio-economic development by way of job creation and rub off on other allied sectors. While the journey has already begun, OEMs, Indian industry and the government will need to work together to overcome some of the roadblocks to ensure that the goals we have set for ourselves as a country and industry are met timely and to the fullest.

(The writer is the President, Rolls-Royce, India & South Asia)


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