With India approaching the 75th year of independence in 2022, there are few institutions that can narrate the roller-coaster journey that the country has taken to become a modern nation. The Defence Research and Development Organisation (DRDO), a premier research and development (R&D) wing of the Ministry of Defence (MoD), is one such institution. It is due to the persistent and painstaking efforts of DRDO that the country can hold its head high among the comity of nations in key defence and strategic technologies.
This article examines India’s defence expenditure over the past ten years. In so doing, it provides a public finance perspective to explain the recurring resource crunch being faced by the Ministry of Defence (MoD). The article reasons that a substantial augmentation of resources for the MoD in the past has faced stiff barriers due to lack of tax buoyancy and also the political, economic and other exigencies that have led to greater public spending outside the traditional areas of expenses, including defence.
The negative list of embargoed defence items is one more step towards creating a strong domestic arms industry and making India self-reliant in defence production.
Banning the sale of imported items through the CSD could supplement the various domestic industry-friendly policy measures being taken by the government for a self-reliant India.
While the steps stipulated in draft DAP-2020 to enable smooth acquisition of systems indigenously designed by DRDO and other public sector entities are a right move, they need to be strengthened further to make procedures more robust and conducive for timely completion of projects.
India needs to have a public version of defence manpower database as part of its annual budgetary document. This would facilitate greater understanding and analysis of any possible manpower-related reforms in the future.
Given the limited resource base and various competing demands, the MoD needs to work on a plan to optimise its allocated resources, rather than hoping to bridge its entire resource gap through additional funding from the Ministry of Finance.
The draft offset guidelines 2020, with revamped features, is a bold attempt at attracting technology and investment as well as promoting defence exports. However, the MoD may consider further refining some of the features of the revised guidelines.
Inclusion of new clauses in the draft DPP-2020 and changes made in some of the existing ones are intended to make the SCD more comprehensive. However, there is a scope for bringing about textual clarity in the new as well as some of the existing clauses of the SCD, especially those which have been modified.
The inevitable reprioritisation of the central government’s expenditure in the coming union budgets would affect the resource allocations particularly for big ministries like the MoD, which will be forced to realign their business practices.
Atma Nirbhar through Arms Import Ban
The negative list of embargoed defence items is one more step towards creating a strong domestic arms industry and making India self-reliant in defence production.