New Delhi: Faster procurement timelines, cutting down archaic processes, eradicating entry barriers for new players and providing a level playing field for all—these are some of the steps the defence ministry is looking to take in 2025. It further plans to use India’s buying power to attract foreign players and set aside more funding for indigenous research and development.
The ministry is also trying to make the export process easier for companies while looking at tie-ups with foreign Original Equipment Manufacturers (OEMs) for joint development and production of critical technologies like aero engines and setting up of specific test facilities with focused funding.
These ideas, among others, were put forward by two officials of the defence ministry including Defence Secretary Rajesh Kumar Singh at a seminar held this week.
This comes with the ministry declaring 2025 as a “Year of Transformation” with expectations that new, lighter and simpler Defence Acquisition Procedures (DAP) will be rolled out, replacing the 2020 version.
Singh said India is currently spending 1.9 percent of its GDP on defence and this can be easily boosted with the growth in GDP.
But “even 2 percent share is proving to be very difficult to spend because of lack of domestic absorptive capacity”, he said, adding: “So resources are no longer a constraint, we need to find pragmatic solutions and make them work.”
He further said that when it comes to the aerospace sector, Atmanirbharta is a source of as much angst as it is a source of commitment or passion. “There is a feeling that sometimes there is a tradeoff with capabilities, and I don’t blame you for that,” he said, adding that “the fact is that in India, we have not been able to develop many critical technologies, jet engines, radars etc”.
According to the defence secretary, part of the problem is that India transitioned directly from a primary agricultural sector economy to a service sector-led economy.
“Our manufacturing base is large and still the 5th largest in the world, but it is still relatively small as a percentage of our economy. Just 15-16 percent. And that lack of wide industrial base combined with inability to do real mass production in many commodities is one of the reasons why we have not been able to make the kind of breakthrough in aerospace as we have in other areas in defence like land systems, which is closely linked to our automobiles, space or missiles,’ he said.
He added that the procurement policy in India’s defence system “in many ways was broken”.
“We have not been able to do things in time. The timelines we have given ourselves are too luxurious. Very basic things like preparing RFPs in time even before you go for an Acceptance of Necessity were not done. Thereafter, you all know that we have been gold-plating many of our requirements and the evaluation was taking too long. It’s time to call a spade a spade and have a different approach,” Singh said.
The defence secretary added that when it comes to procurement, they will tackle it over the course of the next six months to a year, both in terms of process timelines and procedures themselves.
However, he said that “the advantages that incumbents have in our system and the entry barriers we create for new entrants is another area which we need to tackle”.
“Our industrial policy is such that defence is the last vestige of the license permit raj. We still have industrial licensing, perhaps inevitable, but needs to be much faster. When people want to export, we create so many hurdles for them. That it is a real challenge when it comes to ease of doing business,” said Singh.
He went on to say that defence is largely monopolistic with either PSUs or few large private sector companies now.
“We are not able to get enough competition,” he said, pointing that a level playing field has to be offered to all including MSMEs and start-ups to drive innovation.
He said the FDI policy in the defence sector was liberal but only Swedish firm SAAB has come in with 100 percent holding. “I know there will be more. We will have to use our buying power and use strategic partnership as we have done for our transport aircraft to bring in global OEMs to set up bases in India, using ToT in short and medium terms.”
He added, “You will have to go in for global buys as you also set up indigenous supply lines and eventually create a large manufacturing base.”
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‘Aero engines top priority’
Speaking at the same seminar, Defence Research and Development Organisation (DRDO) chief Dr Samir V Kamat said India invests only 5 percent of its defence budget on R&D. “This has to increase to 10-15 percent if we have to achieve all our goals. The government is sanguine about this and hopefully, in the next 5-10 years we will transition from 5 to 15 percent of the defence budget on R&D.”
Kamat identified aero engines as the top priority for the country and the only way forward he sees is co-development with a foreign OEM since this will involve a lot of key technologies India does not have. “But one has to realise that if we want this capability the country will have to invest close to 4-5 billion dollars. That’s Rs 40,000-50,000 crore because we should not repeat the mistakes that we have made in the past.”
He added: “If we want to develop an aero engine, we have to set up testing capabilities for each subsystem, set up a high altitude flying test facility, flying test bed, set up manufacturing facility which can make discs which would mean investing in a forge press which can press 50K tonnes. It is a commitment that a country will have to make.”
On the issue of aero platforms like fighter aircraft, Kamat said the country has reached a certain level of maturity but scaling is the issue. “Today we are not able to deliver 16 aircraft per year, we need to expand our capacity. Whether it should be in a private sector, public or joint is a decision that one has to arrive at,’ he said, adding that he wondered whether a country can afford two players in the fighter stream since numbers will be less.
He further said that warfare is evolving and India has to invest heavily in unmanned platforms, manned and unmanned teaming, MALE (medium altitude, long endurance) and HALE (high altitude, long endurance) drones, pseudo-satellites besides early warning aircraft.
(Edited by Gitanjali Das)
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