Deba R Mohanty
Indian defence scientific technology and industrial sector (hereafter, Indian defence sector) has come a long way in contemporary times. Much water has flown in the last two centuries, ever since the first ordnance factory came into being in 1801. Much of post-Independent India witnessed sluggish progress in the sector, which led to import dependency on weapons for the Indian armed forces to such an extent that more than three fourth of total arms and equipment came through imports, while the remaining were made through license production in India. This not only increased import dependency, which was too costly to say the least but more importantly made the Indian defence sector a mere subservient to the
dictat of foreign arms suppliers. The trajectory of much desired Aatmanirbharta (self-reliance) remained a mere slogan for many decades.
Conflict in Kargil in 1999 marked a watershed moment in Indian defence sector, when political leadership contemplated self-reliance in Indian defence in a serious manner. Opening up of Indian defence sector for private participation, initiation of long-term reforms and corporatisation of government owned public sector defence companies were some of the major steps taken by the government. Reforms continued from 2001-02 for the next fifteen odd years, which produced mixed results. It is only in the last decade or so, renewed efforts in self-reliance in defence have started paying initial dividends. India has now positioned herself as a significant global force. Among the top-five world economies and the fastest-growing among major economies for the previous three years, India has now secured its rightful place in the comity of nations and the new world order. Far from looking down upon, the developed world now looks up to India for advice and guidance.
India’s defence sector has also catalysed this metamorphosis. The government’s reform initiatives, aimed at encouraging indigenous design, development, and manufacture of defence equipment to promote self-sufficiency, have started yielding results. Though a significant importer of defence equipment till now, India’s exports hit an all-time high of Rs 15,920 crore in FY23, an over 10-fold rise since FY17. The target is to treble the exports in less than two years!
Three domestic firms figure prominently in the list of top 100 defence companies worldwide. Two defence industrial corridors have been set up with the private sector on board. Prime Minister Narendra Modi wants the country to become the defence manufacturing hub of the world. One of the easiest ways to achieve the aim and the target of attaining self-sufficiency is to facilitate and incentivise the domestic industry to go for high-end products to ensure a premium in the global market, using domestically produced high-end components and inputs wherever possible.
Since the world is increasingly moving inward, indigenisation would be the key. India has also recently achieved significant progress there, with expenditure on defence procurement from foreign sources reducing from 46% of overall spending in 2018-19 to 36.7% in December 2022. The government has already announced its plan to phase out various defence sub-systems and components in a staggered manner through new and revised negative and positive lists. While all these sounds good for the domestic defence manufacturing industry, inadequate input availability could be a severe dampener. Government must try to avoid such a situation. Global military expenditure is rising, reaching over $2.2 trillion in 2022. Indian industry stands an excellent chance to reap benefits.
Defence and military systems worldwide use lightweight equipment for making tanks, missiles, helicopters, satellites, and others, using aluminium and its alloys. Aluminium is a critical component in the defence system due to its cost advantage and intrinsic qualities. The most used non-ferrous metal and second highest of all metals after steel, aluminium is lightweight, ductile, easy to fabricate, and corrosion-resistant. Aluminium has superior fatigue and strength properties. It is 100% recyclable, and its ore (bauxite) mining is sustainable. India now also boasts its first low-carbon ‘green’ aluminium, produced by Vedanta and branded Restora. In addition to Vedanta, many listed Indian companies have also been engaged in mining, refining as well as recycling of aluminium and related metals and minerals.
Sensing aluminium’s crucial role in defence manufacturing, the US Army had in 2016 entered into a five-year, $50 million ground vehicle light-weighting contract with lightweight metals leader Alcoa, aimed at troop protection, reducing vehicle weight and assembly time. Value-added versions of the malleable metal are increasingly used in several types of
military and defence equipment India is targeting to supply to its customers spanning over 85 countries.
With a 4.1 million tonne (MT) installed smelting capacity, the domestic aluminium industry consisting of well-established entities, such as Vedanta, should easily meet demand even as India’s energy transition is gaining traction. Demand is already high in the power, automotive, packaging, construction, electrical and electronics sectors. India is sitting on a significant yet-to-be-explored bauxite reserve. The industry, however, is not able to fully access the country’s vast resources. Plus, with a contraction in earnings due to a dip in global demand amid rising input costs and declining prices, the industry ought to be
supported through favourable policies to remain globally competitive.
India’s energy transition will receive a roadblock unless the government comes out with a PLI-like scheme for the sector or provide financial assistance to encourage them to produce more and do more value-addition. Aluminium is crucial to achieving energy transition. Electric vehicles and renewables, the two essential components in the energy transition,
need more aluminium, accounting for 85% of solar PV components. EVs need around ten times more aluminium than a traditional vehicle. Aluminium consumption is projected to double in a two-degree climate scenario globally.
Australian aluminium council recently demanded that the government should include bauxite, alumina and aluminium on the list of “critical materials”, as the metal would be essential to deliver the required infrastructure to achieve emission targets. Inclusion would brighten the chances of getting grants through federal support funds. US, EU and Canada have done it. India should follow the path. The sooner, the better.
The author is independent Defence Analyst and Vice President of The Society for the Study of Peace & Conflict (SSPC).
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