Imported share of “indigenous” weaponry down from 48% to 40% in last 4 years

50,000 aerospace parts are now being built in India; but 80,000 remain to be indigenised

By Ajai Shukla

Business Standard, 28th July 18

Import dependence remains a major problem even in indigenous weapons systems, with up to 40 per cent of the value of “Made in India” armaments accounted for by components sourced from abroad, said Secretary for Defence Production Ajay Kumar.

On Friday, addressing an Indian Air Force (IAF) – defence industry seminar in New Delhi, Kumar highlighted the scale of the problem. “Last year, the total production by defence PSUs (public sector undertakings) and OFB (Ordnance Factory Board) was about Rs 59,000 crore, of which Rs 138 billion (Rs 13,800 crore) was the value of imported components. That is roughly 24 per cent. But when we look at Hindustan Aeronautics Ltd (HAL), out of Rs 172 billion (Rs 17,200 crore) of production, Rs 70 billion (Rs 7,000 crore) was imported components -- nearly 40 per cent.”

The situation was even bleaker four years ago, said Kumar. “This 40 per cent [import content] today was 48 per cent in 2014-15. So we have been able to progressively reduce it. But significant work still needs to be done,” he said.

Air Marshal RKS Shera, the IAF’s maintenance chief stated that over 50,000 individual components had already been indigenised, or taken up for production by Indian industry. An additional 3,000 items are indigenised every year, but there are still another 80,000 components that can be built in India.

To address this problem, Kumar proposed a national effort to obtain three categories of technology, which would spur growth in aeronautical manufacture. First, India needed to leverage its position as the world’s fastest growing civil aviation market – with a demand of 850-1,000 civil airliners – to extract key technologies from vendors seeking to supply to India.

“Looking at our combined market size [of civil and defence aircraft] – and these engines will require maintenance, replacements etc. – we should lay down a roadmap for developing an aero engine manufacturing eco-system in the country”, said Kumar. 

Kumar admitted this would not be possible without the government driving it. 

This was precisely the strategy used by China, when it was the fastest growing market for airliners, to promote aerospace manufacture in that country. Beijing managed to arm-twist Airbus into establishing a production line in China, but it is still grappling with aero engine manufacture.

The second technology domain that Kumar wants focus on is materials technology. “This involves various kinds of composite materials, various kinds of super alloys, single crystalline alloys, etc. These technologies again will require significant investments in many cases, and significant scale or operations.”

This again is a path that Beijing traversed while building its high-speed rail network. By making it compulsory for railway carriage manufacturers to set up shop in that country, Beijing obtained advanced materials technologies that it then adapted to aerospace and missile production.

Kumar’s third requirement is computer chip technology. “Whether it is a silicon chip, whether it is a LCD or LED chip, whether it is a gallium nitride chip, this constitutes most of the value that goes into the aircraft, or for that matter any defence platform. This has not just economic considerations, but also security and strategic aspects. As long as we are importing most of these chips, we are exposing ourselves to vulnerabilities that are not visible to the naked eye,” he said.

Setting up production of aero engines, high-tech materials and computer chips in India, however requires manufacture on a global scale, for which, the defence production secretary said he had “streamlined, rationalised and simplified” the export policy. 

“No export request is pending for more than 30 days in the ministry. Repeat orders, do not require even 30 days, they are done literally across the table,” said Kumar.

Noting that start-ups would be central to high-tech defence innovation, Kumar said the IDEX (Innovations for Defence Excellence) scheme that Prime Minister Narendra Modi inaugurated in April would be unveiling its first set of “challenges and problem sets” to start-ups in Bengaluru on August 11. They would be required to present proposed solutions and the ministry would give up to one-and-a-half crore rupees to selected firms to develop prototype solutions.