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Defence Budget 2022: Gearing up India’s domestic military-industrial complex

For this self-reliance initiative, 68% of the capital procurement has been proposed to be earmarked for domestic industry, up from 58% in 2021-22.

Similarly, advanced software tools and networking middleware like DDS (Data Distribution Services) can be implemented for military solutions since these are already prevalent in the IT industry, with ample skilled resources available in India.
Similarly, advanced software tools and networking middleware like DDS (Data Distribution Services) can be implemented for military solutions since these are already prevalent in the IT industry, with ample skilled resources available in India.

By Milind Kulshreshtha

India’s Defence budget for FY 2022-23 stands at USD54.20 billion (Rs 4,05,470.15 crores) after excluding the component of the Defence pensions and is primarily focused towards the upkeep and modernization of an operational Armed Forces.The capital outlay, which focuses towards the modernization of Armed Forces has been increased by 12.82 percent with an allocation of  USD20.36 billion (Rs 1,52,369.61 crores). In recent times, the Defence budget has also been sensitive to the need for establishing a technological framework to advance growth of a vibrant indigenous military manufacturing infrastructure. For this self-reliance initiative, 68% of the capital procurement has been proposed to be earmarked for domestic industry, up from 58% in 2021-22. Here, a whopping 25% of the R&D budget has been earmarked for industry, start-ups, and academia. 

Core Defence R&D as the Key

The aspect that India has been the world’s second largest arm’s importer is a stark reflection of the lack of indigenous manufacturing capabilities to deliver cutting edge weapon systems to keep the Indian Armed Forces contemporary. As per the Ministry of Defence (MoD), indigenisation of the Indian Defence sector is defined as the capability to develop and produce defence equipment for achieving self-reliance and reducing imports. This requires a strong world class indigenous R&D and infrastructure to evolve for the military industry in India. Such R&D is to result in  deployable systems first with the Indian military before being considered for import by any other country. The import of Brahmos missiles by the Philippines is one such success story.

The local industry requires a vibrant military R&D talent to accrue the real benefits from Budget opportunities. The opening up of defence-related requirements for the participation of private industry through organisations like Technology Development Board (TDB), Technological Development Funds (TDF), iDEX etc. definitely brings military problem statements closer to the public. The buzz and interest created by such initiatives is exciting for many startups. However, the lab versions of their innovations transforming into a deployable military solution shall remain the key factor for a startup to grow into a robust MSME. Even after their systems are inducted into the Armed Forces, such MSMEs are required to constantly upgrade the product to beat the competitors, while also keeping the product commercially viable. Meanwhile, the roll out of the innovative product is to be such that the import restrictions do not compromise the combat effectiveness of the Indian Armed Forces while awaiting for the final delivery.

The stringent Defence procurement procedures and other associated approval mechanisms can often leave many enthusiastic innovators disillusioned, especially when they raise funds to showcase an innovation on a NCNC (No Cost No Commitment) basis. On the other hand, a phenomenal number of shortcomings in understanding the Defence QA standards by such nascent startups and MSMEs may lead to product iterations during field trials. Though much effort on this awareness has been put in by the Indigenization Organisations of the Army, Navy and the Air Force, the procedural complexity still remains a hurdle for the Startups. Many provisions have been made by the government to provide financial assistance to develop and commercialize indigenous technologies. Benefits like the R&D Cess Act (1986)  for the levy of cess not exceeding 5 percent on import of technology for the purpose of indigenous development and to adapt the imported technology are still not popular amongst the private industries.

Military Industry Might

The Indian Defence industry aims to design, develop and manufacture state-of-the-art sensors, weapon systems, and platforms and associated equipment for the military. Over the last three decades, the rapid innovations in multiple civilian technologies have outpaced the military technologies, especially at the sub-component levels in the electronics and software industries. From the earlier times when more spin-offs from the military to the civilian sector were taking place, some reverses are occurring now. The commercial applications in areas like Space sciences, cryptography, communications etc. have been drivers of many modern military solutions. The innovative use of COTS (Commercial off-the-shelf) components has made these commercial components a standard fit onboard weapon platform, without compromising the MIL standards.  This makes it possible for Startups and MSMEs to design and develop military systemsas the COTS components can be easily sourced from the OEM distributors. Similarly, advanced software tools and networking middleware like DDS (Data Distribution Services) can be implemented for military solutions since these are already prevalent in the IT industry, with ample skilled resources available in India.

India’s National Strategy requires to be dovetailed with the Defence Technology Strategy keeping in mind the niche technologies used by the Defence forces. A case here is ISRO’s Space technologies which have evolved over many decades. Space technologies were developed by ISRO for civilian purposes in the beginning but today the Indian military is a key beneficiary of this prowess, especially for the role of global ISR (Intelligence, Surveillance and Reconnaissance). In the near future, India’s Space Force Command is anticipated to evolve from the present nascent tri-services Space Cell, with DRDO and ISRO executing the projects.

A robust commercial shipbuilding industry along the Indian coastline shall lead to development of advanced marine technologies like ship’s propulsion systems, marine gas turbines etc. India’s influence in the Indo-Pacific is closely related to the Indian Navy’s strength to deploy Fleet assets across the vast Indo-Pacific waters at speed and levels which can outpace the adversary’s plans.  While the Navy is developing multiple Naval Ship repair yards and dockyards for the ongoing upkeep and maintenance of expensive assets like Aircraft Carriers, Destroyers and Frigates, a robust shipbuilding and marine equipment OEM network across India too is critical. The Revenue Budget supports the maintenance of such repair yards, including offloading of marine works to various private industries. However, the Revenue budget estimates for 2022-23 have increased only by 10% as compared to 2021-22 (RE) and this is likely to put an additional strain on Naval repair organisations to cater for the offloaded work scope.

For any nation, the Defence Industrial Preparedness is closely associated with the concept of the art of preparing for war or any other national emergencies through organized use of  national resources. For any sustained battle in the future, the Defence preparedness levels shall decide the outcome of the military doctrines and, thus, influence the allocation of Defence expenditures for industrial planning. For India, the UP Industrial Defence corridor and Tamil Nadu Defence corridor are to evolve as the  hub for private industries, subcontractors, skilled manpower and R&D for manufacturing  military systems and technologies.

Conclusion

The Defence industry of India has to evolve as a strategically important sector and become a major employer in the private sector, primarily focused towards enhancing India’s war fighting capabilities. The competition in Defence manufacturing is still emerging in India due to the technological complexity of modern weapons and the government’s preference for domestic suppliers. As the Atmanirbhar Bharat initiative in Defence evolves with more opportunities being encouraged, an active participation to establish credible military manufacturing lines can be advantageous for growth of MSME culture through entrepreneurial acumen and innovation. 

(The author is a Strategic Analyst with a keen interest in technology related to C4I solutions and Multiplatform Multi-sensor Data Fusion (MPMSDF). Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited).

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