Dheeraj Sharma asked: What are the problems in the current policies of ‘Make in India’ for production of maintenance equipment for the defence forces?

Laxman Kumar Behera replies: The Make in India initiative has been a great catalyst in ushering in numerous reform measures. Under the initiative, the government has created a new procurement category to source defence items designed and/or manufactured with higher indigenisation by the Indian entities, simplified the defence industrial licensing process, hiked the FDI cap, articulated measures to promote exports, provided a level playing field to the private sector vis-à-vis public sector in matters of taxes and payment terms, allowed the private sector to use government-owned trial and testing facilities, and has launched several schemes to promote innovation. These measures have begun to have a positive impact on indigenous arms manufacturing and exports. India’s defence production has increased to nearly Rs. 65,000 crore in 2017-18 which includes a contribution of about Rs. 6,000 crore from the private entities. Defence exports, which were negligible earlier, have increased to nearly Rs. 10,000 crore in 2018-19.

Going forward, the Make in India initiative faces two challenges. These pertain to the resources and the decision-making process. The capital procurement budget, which is used to fund many Make in India programmes, has not grown at the desired pace due to budgetary constraints. The decision making process, especially which involves procurement from private companies, has at times been slow, limiting the effective contribution of this nascent sector. Addressing these two key concerns could go a long way in strengthening indigenous arms manufacturing.

Posted on June 25, 2019

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