Modi's 'Make in India' May Slow Down Defence Imports

Contrary to expectations of international arms suppliers of a rise in defence imports following a change in government in New Delhi, Prime Minister Narendra Modi’s ‘Make in India’ call may slow down direct foreign purchases.

The focus of the new government has shifted to defence equipment being manufactured at home for exports and domestic use rather than imports. A policy is taking shape to bring an increasing array of military equipment under the ‘make in India’ category from the earlier ‘buy and make’. This in turn should lead to a fall in direct defence imports in the medium term.

New Delhi is working to encourage privately held Indian companies to get into defence equipment manufacturing. Foreign companies will be forced to to find local partners if they have to bid for projects earmarked for ‘make in India’.

If going by the clearances given by the defence acquisition council (DAC), India’s supreme arms procurement body in the few meetings it has had under the new dispensation, the government appears firm in its resolve to make India a manufacturing base for defence hardware instead of being dependent upon foreign products and technology.

DAC has only given the go-ahead for the procurement of long delayed but urgently needed items such as the 814 artillery guns estimated to cost INR15, 750 crore (US$2.5 billion). Now an RFP has to be issued and vendor selected to import the first 100 and manufacture the rest in India.  The second is the procurement sanction for 16 Sikorsky S-70B helicopters for the Indian Navy’s Multi-Role Helicopter requirement. These are the only two big ticket procurement programs cleared so far.

But the news is not in what the government has cleared, but what it has deferred. A proposal to acquire 106 more Pilatus basic trainers for the IAF, which was earlier considered a formality, has been deferred together with a plan to replace the Indian Air Force’s Avro transport planes. Besides, the DAC cancelled a plan to procure 197 utility helicopters for the Indian army and navy. It is quite likely that this program will be billed for indigenous manufacture with foreign technology.

New Delhi’s ‘Make in India’ policy has not left even even its “all-weather friend” Russia unconcerned. Prime minister Modi sent the right message during his meeting with Russian leader Putin when he said that the latest helicopter of Russia would be manufactured in India. For years Russia has enjoyed the status of a captive supplier for much of India’s defence hardware. Though this eroded over the last few years with India expanding its procurement sources to the US, Europe and Israel, Russia still supplies India its main combat assets such as Su-30MKI aircraft, T-72 tanks, attack ships, submarines and missiles.

“The message is loud and clear. Foreign companies will no longer be able export to India whole systems. They will have to find local partners, set up manufacturing plants and develop local industry”, said an industry source.