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Prime Minister Narendra Modi’s appeal to the global manufacturers in Independence Day speech—to manufacture in India and sell here in India and elsewhere—has generated varying degrees of attention at home and abroad. Whether such an avowal is a byproduct of a crafted political vision or a mere popular adventurism is a matter of debate.
Immediate reactions to such a statement have, among others, made certain section of stakeholders stand and take note, especially the defence manufacturers, both domestic and foreign ones. It must be noted here that both domestic and foreign arms manufacturers—interested in investing knowledge and manufacturing in the Indian defence sector—have been disappointed for the past decade or so, thanks primarily to three core factors: directionless politico-executive roadmap for the industry reflected in ad-hoc policy pronouncements, complicated procedural mechanisms (defence procurement procedure, or DPP) whose revisions adopted just cosmetic changes and, a disconnect among key stakeholders (armed forces, administration and industry) of the Indian defence sector.
Primary government policy pronouncements and periodic notifications related to the defence sector reveal several changes in policy and procedural arrangements. For example, while ‘defence offsets’ had been introduced as a mandatory clause in any procurement tender worth more that R300 crore whereby a standard 30% of worth of the contract must be ploughed back to Indian industries, there are efforts to put a strict timeline on stages of the procurement procedure. Neither defence offsets nor the cosmetic changes in DPP have brought in any desirable results. It is learnt that while defence offsets work value till date is less than $5 million with a promise of offsets works worth $10.1 billion in pipeline, timelines of most of the on-going military acquisition projects are in various stages of approval for delays. Consider this: the RFP (request for proposal) for 126 MMRCA (medium multi-role combat aircraft) tender was floated in 2008 and the project is yet to see the light of the day! In sum, the equipment-driven, ambitious military modernisation plan has been hit more by scandals, policy paralysis and administrative inaction than any thing else.
While all these issues need serious deliberations, the most important aspect of Indian defence—the issue of import dependency—needs urgent attention. Consider this: not only is India one of the top arms importers in the world, with an ever-increasing capital acquisition budget (pegged at $8 billion this year), but also its import dependency is considered to be of nearly