India today is the third highest military spender ($76.6 billion in 2022), after the US and China. It accounts for 3.7% of global military spending, and also has the second largest defence force in the world. Its defence expenditure constitutes nearly 2.4% of the Indian GDP. But a billion dollar question here is that how much of this need is sourced indigenously and what are the three emerging key sectors on which the Indian defence industry should focus on, to make it a leading global defence supplier.
After India’s independence, in the nascent stages of a young nation, the country planners took to the route of securing the military arsenal from foreign countries. But in this regard the western countries literally did not woo it, as they were more interested in selling their goods and not transferring the technology. To fill this void, the erstwhile USSR stepped in and offered India its own weapons, often with built-in technology transfer component also.
For a large part then on, India followed a policy of heavy dependence on the Soviet-made arms and armaments, with small bits of indigenisation thrown in, but not commensurate with a country the size and stature of India.
New paradigm of defence manufacturing
This paradigm was completely changed after PM Modi took command of the country. Under his stewardship the Indian defence sector, followed the Make in India initiative announced in September 2014 and then the Aatmanirbhar Bharat initiative launched in May 2020.
Through Make In India, India aims to reduce its reliance on imports of defence equipment and technology and increase its defence exports to seize a share of the $2.1 trillion global defence market and has set an ambitious export target of $5 billion by 2025.
The billion dollar question is how much of this defence need is sourced indigenously and what are the three emerging key sectors on which the Indian defence industry should focus on, to make it a leading global defence supplier
The Make in India initiative aims to encourage the indigenous production of defence equipment by established firms as well as emerging startups and SMEs through tax incentives and favourable policies. Additionally, the Indian government has also launched the Innovation for Defence Excellence (iDEX) programme to foster innovation and promote startups in the defence sector.
But what has set the ball rolling was the launch of a new Defence Acquisition Procedure (DAP) replacing the earlier Defence Procurement Procedure or DPP in 2020 by the Ministry of Defence (MoD).
Added to it was a new category for defence procurement ‘Buy Indian-IDDM’ (Indigenously Designed, Developed and Manufactured) introduced in DPP-2016 to promote indigenous design and development of defence equipment. It was accorded top most priority for procurement of capital equipment.
Besides this the government also notified the ‘Strategic Partnership (SP)’ Model which envisages establishment of long-term strategic partnerships for Indian entities through a transparent and competitive process, wherein they would tie up with global Original Equipment Manufacturers (OEMs) to seek technology transfers to set up domestic manufacturing infrastructure and supply chains.
New India in making
What apparently could help India in this regard is to provide motivation to the private sector to pool-in its resources and R&D with public sector enterprises, and start chartering new heights. A working example in this regard is the new DAP, which has certainly given a boost to the public-private partnership model.
The successes achieved under this model vary from making lights armaments to drones of every type and kind, in avionics and MRO, all of which have shown really positive results.
During the opening ceremony of Def Expo 2022 in Gandhinagar, Gujarat on October 19, 2022, the Prime Minister announced the fourth positive indigenisation list, which consists of 101 items to be sourced domestically, in addition to the earlier 310 items that must be sourced domestically and contain at least 50% domestic content.
This step by the government has been a big catalyst to encourage domestic companies to invest and build capabilities either organically or through technology transfers with global OEMs.
What apparently could help India in this regard is the motivation for the private sector to pool-in its resources and R&D with public sector enterprises, and start chartering new heights
But if India indeed needs to be at the forefront of the global defence manufacturers, then in 2024 it should certainly set its sights at increasing its might in the fields of AI and Generative AI, Quantum Technology and Semi-conductors verticals.
Let’s take a look at the hindrances and possible attainments for these three verticals in 2024 by Indian defence manufacturing sector.
AI and Generative AI
Currently, Artificial Intelligence (AI) has encompassed us in every walk of life, permeating various sectors and driving monumental innovation. It is believed that along with robots, AI is the technology that will finally free humanity from humdrum tasks and launch us into lives of more creativity and leisure.
Additionally, this is the right time to get ready for a future where AI can be a leading role in military operations or warfare. The progress in AI is bound to bring new potential to the defence technology too. Through AI-managed machines in military operations the potentials of fighting a war can be improved besides developing the performance of military units.
AI could synergise teamwork between humans and machines, where AI- powered machines assists humans to take precise and appropriate warfare decisions, besides bringing together unmanned as well as manned systems for various kinds of combat, tackled by machines and human in tandem.
AI is becoming a necessity to ensure the security of the future. It is turning out to be essential for a nation to shape up the defence technologies to maintain supremacy over their adversaries.
But for this to be achieved, access to a consistent quantity of data and also the prowess to mine that date, leads us to Quantum Computing Technology. Additionally, the rapid development and integration of AI technologies needs advanced semiconductors, optimised for AI processing using Quantum technology. Thus, the three verticals are essentially supplementary and complementary to each other.
But here, the Indian government is planning to adopt the Sovereign AI model, which will definitely affect the Quantum technology and Semiconductors verticals also.
Minister of State for Electronics Rajeev Chandrasekhar recently said that India is determined to have its own sovereign AI. With Sovereign AI and an AI computing infrastructure, the government is not looking to just compete with the generative AI type of model. It also wants to focus on real-life uses in healthcare, agriculture, governance, etc, to maximise economic development of the country.
In this regard the GoI highlights the Digital Public Infrastructure (DPI) – where the underlying technology is sanctioned by the government, which is later offered to private entities to develop various uses. It also presents India as a country that has effectively used technology to develop and deliver governance solutions at a mass scale through this route, for its biometric identity – Aadhaar and payments solution Unified Payments Interface (UPI) programmes.
If India indeed wants to be at the forefront of the global defence manufacturing, then in 2024 it should certainly set its sights at increasing its might in the fields of AI and Generative AI, Quantum Technology and Semiconductors verticals
However, this route might be beneficial for the people-centric programmes but for the defence sector to harness the positive results of the AI, supplemented with increased self-efficiency in Quantum and Semiconductors verticals, the SP or PPP-models might be the right fit.
Generative AI burst into the mainstream in 2023, but 2024 will be the year that the world would realise its real power.
Quantum Computing
There’s been a growing buzz around quantum computing for a while now, and 2024 will mark the year when this is set to transition to tangible benefits. Quantum computers are capable of carrying out vast numbers of calculations simultaneously by harnessing weird and wonderful elements of quantum physics, such as quantum entanglement and superposition.
In recent years, India has taken significant strides towards establishing itself as a critical player in quantum computing. The Government of India (GoI) has demonstrated its commitment to developing indigenous quantum capabilities by announcing the National Mission on Quantum Technologies and Applications (NM-QTA) in the 2020-21 budget, with an allocation of Rs 8,000 crores (approximately $ 1.1 billion) over five years.
The implications of quantum computing on national security are multifaceted and far-reaching. Some of the critical aspects include developing a quantum communication system and quantum key distribution (QKD), which would revolutionise secure communications. By investing in quantum communication research, India can get outcomes to bolster its cyber-security and protect critical national infrastructure from cyber threats.
Further, India’s investment in post-quantum cryptography (PQC) and quantum-resistant algorithms is vital in ensuring the protection of sensitive information and national secrets.
The Indian government is planning to adopt the Sovereign AI model, which will definitely affect the Quantum technology and Semiconductors verticals also
Similarly, Quantum technologies can provide significant advantages in the military domain too. Quantum sensing and imaging can enhance surveillance capabilities, while quantum navigation systems can provide accurate information about one’s position independent of satellite-based systems like GPS.
Furthermore, quantum computers can optimise military logistics, devise novel strategies, and analyse large datasets to provide valuable intelligence. India’s investment in these areas could significantly enhance its military capabilities and national security. As countries worldwide race to achieve quantum supremacy, India’s progress in quantum computing is vital for its national security and strategic autonomy, too.
Semiconductors Capability
Currently, India’s semiconductor demand stands at around $24 billion and is expected to reach $100 billion by 2025. Semiconductors are now becoming the critical components of military equipment, systems, and networks based on IoT and 5G/6G technology; the demand for semiconductor chips is set to increase exponentially.
While the importance and necessity of semiconductor technology for the military, with the possible partnership between defence manufacturers and semiconductor manufacturers can’t be denied, there is the bigger question of what must be India’s focus areas when using semiconductor components to manufacture military-grade equipment.
There might be some military applications of semiconductor technology that the defence industry can benefit from in the short term, which could include Power Systems, Communication Systems and Geo-positioning.
Sovereign route might be beneficial for the people-centric programmes but for the defence sector to harness the positive results of the AI, SP or PPP-models might be the right fit
Moreover, a number of military applications exist but prioritisation is imperative when dealing with semiconductor technology. It would be better for the Indian defence industry focuses on the manufacture of existing applications rather than invest in research and development.
With military modernisation the need of the hour for India, the domestic defence industry should look at how to leverage the most out of semiconductor technology with already developed applications.
No one could deny that AI, Quantum Technology and Semiconductors will be the most dynamic technologies and change setter for the defence-manufacturing sector in 2024. It is also clear that the existing and potentially new semiconductor technologies will play a major role in the design of advanced military systems.
Semiconductor components and materials remain integral to developing defence technology. With the dual approach of the Indian government in supporting both indigenous defence manufacturing and domestic semiconductor fabrication, it is an opportune time for collaboration between the two interrelated industries.
It would not be wrong to surmise that the focus of India’s future defence technology hinges on the country’s ability to source its own semiconductor components, which in turn could lead to a better use of increased Quantum technology outputs based on more sophisticated and refined semiconductors, which in turn with Quantum computing will lead to a more crucial usage through Generative AI. Thus, increasing capability in one sector would ultimately lead to India taking the lead in the rest of the two sectors too. Taking three, as holistically one, should be the main thrust of policy makers and military strategists.
-The writer is a Delhi-based senior political, defence and international affairs commentator. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda
