In 1940 legendary Indian industrialist Walchand Hirachand struck a deal with an American businessman to produce combat aircraft in India. One of the investors in the project was the Maharaja of Mysore who agreed to invest Rs 25 lakh and also gave 700 acres of land free for the project. Just eight months later Hindustan Aircraft flight tested its first product, a trainer aircraft. It could have been the beginning of a new aeronautical era in India, but it was not to be because the British sabotaged the project with great alacrity.
Sumit K. Majumdar writes in his book ‘India’s Late, Late Industrial Revolution: Democratizing Entrepreneurship’ that “the British government in Whitehall tried to scuttle the project” with the excuse that Indian firms were not capable enough to manufacture combat aircraft. Hindustan Aircraft was taken over by the government in 1942, and that was the last anybody heard about the aircraft.
India got independence in 1947 but the government of Jawaharlal Nehru retained the same level of hostility towards defence. Lt Gen Eric A Vas (retired) provides an insight into Nehru’s mindset: “In the late 1950s, our government was keen to purchase modern guided missiles for the air force. Negotiations for this were in progress with the British government. The Indian military attaché in London was in touch with British suppliers. While Nehru was visiting the UK, the attaché arranged for the firm concerned to display a short demonstration film for the prime minister….”
Vas continues: “The brief film was very realistic and ended with a loud bang as a missile shot down an ‘enemy’ plane in a cloud of flame. Nehru got up in a rage, and shouted, ‘I will have nothing to do with these sort of weapons’ and stormed out of the room followed by his daughter Indira Gandhi.”
According to the biography of Maj Gen AA “Jick” Rudra written by Maj Gen DK “Monty” Palit, Nehru thought that it was futile to retain the army. Shortly after independence, Lt Gen Robert Lockhart as the army chief took a strategic plan to the prime minister, asking for a government directive on the defence policy. He came back to Jick’s office shell-shocked. When asked what happened, he replied that the PM took one look at his paper and blew his top. Nehru shouted: “Rubbish! Total rubbish! ‘We don’t need a defence plan. Our policy is ahimsa (non-violence). We foresee no military threats. Scrap the army! The police are good enough to meet our security needs.”
Post-independence, India spent a measly 1 percent of GDP on defence. Despite Pakistan’s invasion of Kashmir in October 1947, which led to the loss of a third of that state, little money was allocated for defence manufacturing. Here’s what noted Gandhian Acharya Kriplani said on the defence budget in Parliament in 1957: “The mounting expenses on the army must be cut down. The followers of Gandhi and adherents of universal peace should not increase military expenditure.”
Five years later when the Chinese attack caught India napping, the same Kriplani was calling for heads to roll. It never occurred to him that by striking at the roots of the defence industry he was one of the playmakers of the 1962 debacle.
Historical Perspective
After the humiliation in the Himalayas, there was a belated acknowledgement of the need to equip the army and build a strong military defence industrial base to reduce dependence on foreign suppliers. However, progress in this regard remained slow due to various factors, including a lack of indigenous capabilities, inadequate funding, bureaucratic hurdles and a complex regulatory framework.
At first, the private sector was not allowed to produce weapons because Nehru and his Gandhian colleagues had decided that India had no enemies and would solve all its problems through peaceful ways. In their view, the military needed the bare minimum of weapons, which could be produced by the defence PSUs. After the 1962 India-China war, the state-owned ordnance factories were allowed to expand production to re-equip the armed forces. However, when the DPSUs grew powerful, they lobbied to keep the private sector out.
Considering this cavalier attitude towards its own defence, even foreign leaders baulked at helping India. In May 1964, when Defence Minister Yashwantrao Chavan made a visit to the Pentagon and requested the Americans to sell India the F-104 Starfighter, the most advanced jet fighter of that era, US Defence Secretary Robert McNamara told him: “Mr Minister, your air force is like a museum. I wonder whether you are aware of the variety of aircraft in your air force. You are still operating with Hunters, Spitfires, Vampires, Liberators, Harvards – exotic names of World War II vintage. All these aircraft are only worthy of finding a place in a museum.”
McNamara suggested that until India disbanded that fleet, it was no use acquiring any sophisticated aircraft.
The American rebuff forced India to turn to the Soviet Union, resulting in a massive Russian effort to subsidise New Delhi’s military build-up. It was in this phase that India saw the onset of licensed production in a big way to achieve self-reliance. However, Maj Gen G.D. Bakshi (retired) points out that the spurt in defence production was purely an optical illusion. “Licence production as a quick fix did great damage to our in-house design and R&D capacities,” he explains. “The HF-24 (jet fighter) design team, the teams that made our 75/24 Howitzer and 105 mm field guns were all disbanded and the experience irrevocably lost. Only the Indian Navy retained its ship design teams and is today building, rather than buying, a new navy.”
Bakshi adds that the Defence Public Sector with its captive customer base felt no need to innovate or carry out any product improvement or technology development. “It failed to carry out any in-house midlife upgrades of the equipment it was manufacturing.”
Key Challenges
Over the years, India has faced several challenges in its pursuit of self-reliance in defence production. Some of the significant hurdles include:
Technological Gap: Bridging the technological gap between India and more advanced defence manufacturing nations has been a major challenge. Developing cutting-edge technologies, such as advanced missile systems, aircraft and electronic warfare systems, requires substantial investments in R&D and technological collaboration.
Lack of Industry Collaboration: Collaboration between the defence industry and research institutes has been limited, hindering the flow of technology and knowledge transfer. Encouraging closer ties between academia, research institutions, and defence manufacturers is crucial for indigenous development and innovation.
Regulatory Framework: India’s defence procurement policies and bureaucratic procedures have often been criticised for their complexity and lack of transparency. Streamlining these processes and reducing red tape are essential to attract private sector participation and foreign direct investment (FDI) in the defence industry.
Government Initiatives
Recognising the need for self-reliance in defence production, the Indian government has launched several initiatives and policy reforms to catalyse the growth of the domestic defence industry. Some of the notable initiatives include:
Make in India: Launched in 2014, the Make in India campaign aims to promote domestic manufacturing across various sectors, including defence. It provides incentives for defence manufacturers to establish production facilities in India, fostering job creation, technology transfer, and economic growth.
Defence Procurement Procedure: The Defence Procurement Procedure (DPP) has undergone significant revisions to simplify procurement processes, encourage indigenous development, and promote the participation of private sector companies. The introduction of “Buy (Indian-IDDM)” and “Strategic Partnership” categories provides preference for indigenous products and facilitates technology collaboration with foreign Original Equipment Manufacturers (OEMs).
Defence Technology Fund: The Defence Technology Fund (DTF) was established to provide financial support for R&D projects and technology acquisition in the defence sector. The fund aims to bridge the technological gap and promote indigenous innovation.
Defence Industrial Corridors: The government has identified specific regions in the country to develop Defence Industrial Corridors, fostering an ecosystem for defence manufacturing. These corridors provide infrastructure, connectivity, and support services to attract investments and promote collaboration between public and private sector entities.
Public-Private Partnership: Realising the potential of the private sector in boosting defence production, the Indian government has encouraged public-private partnerships (PPP) to drive innovation and technology development. The Strategic Partnership (SP) model allows private companies to collaborate with foreign OEMs for the manufacturing of major defence platforms. This model aims to build long-term capabilities and enhance self-reliance in critical areas such as submarines, fighter aircraft, helicopters, and armoured vehicles.
Emerging Technologies: India’s journey towards self-reliance in defence production involves leveraging emerging technologies to gain a competitive edge. The country has made significant strides in areas such as aerospace, missile systems, unmanned aerial vehicles (UAVs), and cybersecurity. Investments in research and development, along with collaborations with foreign partners, are driving advancements in these critical sectors.
Make in India
India’s journey towards achieving self-sufficiency in defence manufacturing has gained considerable momentum after the Aatmanirbhar Bharat initiative through which the Government has accorded top priority to domestic procurement under the Defence Acquisition Procedure (DAP)-2020, which lays emphasis on sourcing capital items from domestic manufacturers.
To curtail imports and encourage domestic manufacturing, the Government has issued four ‘Positive Indigenisation Lists’ comprising a total of 411 items for Services, and three such lists for Defence Public Sector Undertakings, encompassing 3,738 items. Import embargoes have been enforced for these items after specified timelines, promoting the local manufacturing ecosystem and technological self-sufficiency.
Streamlining the industrial licensing process and extending its validity period have simplified procedures for defence manufacturers, facilitating their engagement in the sector. Additionally, the liberalisation of the foreign direct investment policy has opened doors for increased investment, with 74 per cent FDI now permitted under the automatic route.
The government’s commitment to fostering innovation and collaboration is evident through initiatives like the Innovations for Defence Excellence (iDEX) scheme, Mission DefSpace, and the establishment of two defence industrial corridors in Uttar Pradesh and Tamil Nadu. These initiatives promote partnerships with startups, Micro, Small and Medium Enterprises (MSMEs), and academia, driving research and development, technology infusion, and economic growth in the defence manufacturing sector.
The Defence Dialogue, organised by The Economic Times earlier in 2023, highlighted that Aatmanirbhar Bharat has yielded positive results, reducing reliance on foreign defence procurement and building its strategic and economic capabilities. “The share of expenditure on defence procurement from foreign sources has decreased from 46 per cent in 2018-19 to 36.7 percent as of December 2022. Weapons worth Rs 70,500 crore have been sold by Indian defence manufacturers, including the locally made Brahmos missiles, Shakti electronic warfare systems and maritime utility helicopters for the Indian Navy. The Indian Air Force has also approved the integration of the Long-Range Stand-Off Weapon on SU-30 MKI aircraft. Additionally, the Indian Army is set to procure locally made 155mm/52 Caliber ATAGS and high-mobility and gun-t vehicles.”
The report adds that India’s efforts to reduce dependence on defence imports have yielded substantial results, with a decline of 11 per cent between 2013-17 and 2018-22. “This reduction can be attributed to the implementation of a more streamlined procurement process, diversification of arms suppliers, and a concerted push to promote local designs. In the financial year 2022, India’s domestic procurement accounted for a significant 68 per cent.”
Defence exports
In 2009 Ecuador signed a contract for seven Dhruv Advanced Light Helicopters with HAL for $45.2 million. In just a few years of service, four of the seven ALHs crashed due to machine failure. Ecuador grounded all the remaining ALH, and in 2015, scrapped the contract.
The embarrassing episode is a warning against rushing into defence deals that India is unprepared for. Perhaps the Dhruv was not climatised for the Ecuadorian environment; perhaps it was rushed through by some bureaucrat despite warnings about the helicopter’s niggling quality issues. Whatever the cause of the crashes, it can be safely concluded that Ecuador won’t be a repeat customer.
If another disaster strikes exported Indian weapons, the country will be stuck with a reputation for shoddy quality. As it is, the arms market is intensely competitive. With new production methods, including 3D printing, now available, weapons production is no longer the preserve of the superpowers. Even dirt-poor Pakistan, where starvation is rampant and people are fighting over bags of flour, has been exporting weapons and parts to dozens of countries.
The good news is that after the Ecuadorian disaster, India is clawing back into the global arms market. As New Delhi strengthens its domestic defence manufacturing capabilities, it is emerging as a sought-after supplier of defence equipment worldwide. Defence exports have witnessed a remarkable eight-fold increase since 2016-17, from Rs 1,522 crore to Rs 13,800 crore. The central government has set a target of reaching total defence exports of Rs 35,000 crore by 2024-25.
Notable export deals include the supply of 155-mm artillery guns and Teevra 40-mm guns to the Indonesian Navy, and a $250 million contract with Armenia for the supply of Pinaka missiles. India is also on its way to finalising BRAHMOS missile deals with Indonesia and the Philippines, following the successful $375 million agreement signed with Manila in 2022.
In another major coup, in June 2023 the Argentinian Ministry of Defence signed a letter of intent with Hindustan Aeronautics Limited to acquire Light Utility Helicopters, which has a range of 500 km and a service ceiling of 21,325 feet. The size of the potential deal has not been disclosed but is pegged at 20 choppers. India is also pushing the Tejas Light Combat Aircraft to the Argentine Air Force.
The fact that India is able to export advanced weapons platforms that are simultaneously being inducted into its own defence forces is an indication of two developments. One, Indian defence companies appear to have the capacity to manufacture these weapons for both the domestic and global markets. Two, no country exports its top-of-the-line or newest weapons; this means India has developed more advanced versions of the Light Utility Helicopters, BRAHMOS and Tejas. This means the country has finally adopted the ladder or incremental approach to defence production in which weapons progressively keep getting better.
In contrast, the earlier approach was to abandon years of R&D after developing a below-par weapon, and often this happened due to collusion between the political leadership and rogue commanders looking for kickbacks from imports. Strategy Page comments: “The culture of corruption still exists in Indian defence procurement, but it is under heavy attack. Even if no bribes were involved when buying foreign weapons, that would not fix the inability to create a competitive Indian weapons industry.”
Weapons sales can be a lucrative industry that generates significant revenue for the exporting country. It can lead to the growth and development of India’s domestic defence industry. By increasing production and meeting international standards, the industry can become more competitive globally.
Arms exports are not just about making money. They can serve as a means to establish and strengthen diplomatic relations with other countries. It can lead to strategic partnerships and collaborations in defence and security matters. Becoming an arms exporter can enhance India’s geopolitical influence. Countries that depend on Indian weaponry are likely to develop closer ties and cooperation with India, leading to enhanced regional influence.
As Prime Minister Narendra Modi said at the 2015 Aero India show in Bangalore: “I don’t want India to be No. 1 in the import of defence equipment… We should export.”
Path Ahead
It is a measure of India’s rapid strides in self-sufficiency that on June 28, 2023, the Indian Navy donated an active warship to Vietnam. The missile corvette ‘Kirpan’ officially departed for Vietnam during a recent visit by Vietnam’s Minister of Defence and is a demonstration of India’s disapproval of China’s illegal and provocative actions in the South China Sea.
“The transfer of an indigenously built in-service missile corvette, INS Kirpan, from the Indian Navy to Vietnam People’s Navy reflects India’s commitment to assist its like-minded partners in enhancing their capacity and capability. This is the maiden occasion of gifting a fully operational corvette by India to any friendly foreign country,” the Indian Navy said.
Gifting an active warship is a big deal – it sends out the message that the country’s arsenal is well stocked and there is no dearth (of warships at least). India has come a long way from the days of visiting foreign capitals, scrounging around for low-cost weapons. Don’t forget, India’s first three aircraft carriers were second-hand.
India’s journey towards self-reliance in defence production reflects its commitment to national security, economic growth and technological advancement. The government’s initiatives, coupled with increased private sector participation, have set the stage for a transformative shift in the country’s defence manufacturing landscape. With sustained efforts, investments in R&D and collaborative partnerships, India has the potential to emerge as a global hub for defence production, ensuring a secure and self-reliant future.
– The writer is a globally cited defence analyst. His work has been published by leading think tanks, and quoted extensively in books on diplomacy, counter terrorism, warfare and economic development. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda
–The writer is a globally cited defence analyst. His work has been published by leading think tanks, and quoted extensively in books on diplomacy, counter terrorism, warfare and economic development. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda
