Mohit Kumar Nayak asked: Why does India have a low indigenisation in the defence sector?

Amit Cowshish replies: Broadly speaking, there are four reasons for the low level of indigenisation in defence products. The primary reason is the absence of a pragmatic overarching policy which, apart from defining the term ‘indigenisation’ which is presently interpreted in different ways, also recognises that indigenisation cannot always result in savings, especially in areas like development of special alloys and critical technologies which do not offer economy of scales.

Consequently, the focus has been mainly on indigenisation of components, sub-assemblies and assemblies which can be manufactured in India at a cheaper cost vis-à-vis the cost of importing the same product. Such items do not generally account for a substantial proportion of the technologies that go into the making of a high-technology product and, therefore, the extent of indigenous content in various defence products continues to be low. This is only one example of several issues that need to be addressed at the policy level.

The second reason is the absence of an overarching organisation to channelise the efforts being made by several agencies towards a pre-defined goal. Several agencies presently involved in these efforts include the Indigenisation Directorates of the Services, Defence Research and Development Organisation, Ordnance Factories Board, and Defence Public Sector Undertakings, but these efforts are largely disjointed and lack synergy.

Procedural complexities are the third reason for the slow pace of indigenisation. Though some efforts have been made in the recent years to smoothen the process, agencies involved in indigenisation continue to follow their own procedures and norms.

A typical example of such a complexity would be the process of selection of partners from, and giving assurance of orders to, the private sector industry, especially the micro, small and medium enterprises, who play a critical role in developing niche technologies and providing solutions that are critical for indigenisation.

Lastly, there is a severe budgetary constraint, making it difficult to earmark substantial sums of money to undertake large-scale efforts, especially for indigenous design, development and production of futuristic equipment, platforms, and weapon systems, which is essential for achieving self-reliance.

Indigenisation depends heavily on defence research and development (R&D), on which the public spending in India has consistently been quite low. Barring a few notable exceptions, even the private sector has been reluctant to make heavy investments in R&D because of the uncertainty that the indigenously developed product will be procured by the Ministry of Defence (MoD).

Posted on March 19, 2021

Views expressed are of the expert and do not necessarily reflect the views of the Manohar Parrikar IDSA or the Government of India.