By Ajai Shukla
Business Standard, May 17, 2023
For almost three years now, the ministry of defence (MoD) has been promoting aatmanirbharta(self-reliance) in the acquisition of military equipment by placing incremental curbs on the import of specified weapons and defence kit. In December 2020, the MoD first instituted curbs on the import of line replacement units (LRUs), sub-systems, assemblies, 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 import bans, 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 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, only constituted 36.7 per cent of capital expenditure in the year ending December 2022.
Indigenous defence industry, however, raises three important questions over the notion of protecting domestic defence manufacture through the issuance of 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 that a key intention of these import embargoes are 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 R&D Organisation (DRDO). Private defence industry has, too 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 raised 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 that 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 weapons system bought by India. As the sophistication level of a platform or equipment increases, raising indigenisation levels becomes increasingly difficult.
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