New Delhi: Former Chief of Defence Staff General (CDS) General Anil Chauhan (Retd) has put the spotlight on a practice many within India’s defence establishment have privately complained about for years—white labelling.
During his interaction at ThePrint’s marquee event Off The Cuff, Gen Chauhan described white labelling as a serious problem confronting India’s defence manufacturing ecosystem, warning that it undermines the very objective of ‘aatmanirbhar Bharat’ in defence.
His remark came at a time when the government has increased procurement from Indian industry, especially the private sector.
While this has helped expand the domestic industrial capability, it has also created incentives for some firms to market foreign equipment as indigenous with little or no value addition.
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What is white labelling
White labelling refers to supplying foreign systems as indigenous products with little or no value addition. This is done by applying an Indian brand name and supplying with minimal or no local design, development or manufacturing.
Within defence circles, the more commonly used term is “screwdriver-giri”, a somewhat derisive expression describing the assembly of imported kits, licenced manufacturing or the simple rebadging of foreign equipment without any meaningful technological capability.
The practice also extends to products manufactured under Transfer of Technology (ToT) arrangements where Indian companies undertake licensed production but do not own the intellectual property, design know-how or critical technologies.
While licensed production does play a role in capability-building, experts told ThePrint that problems arise when such products are projected as indigenous innovations.
In many cases, Indian companies enter into partnerships with foreign original equipment manufacturers (OEMs), secure contracts meant for domestic industry and then supply products that are essentially imported systems carrying Indian branding.
The drone example
The issue came into sharp focus in September 2024 when intelligence agencies red-flagged the presence of Chinese components, including electronic parts, in drones procured by the Indian armed forces from domestic private manufacturers.
Several of these drones were deployed along sensitive sectors on the northern and eastern borders.
The defence ministry then put on hold an Army order for logistics drones that were intended for deployment along the Line of Actual Control (LAC) with China.
One of the key concerns highlighted at the time was that although defence procurement rules prohibited Chinese components, the Army was largely relying on self-certification by manufacturers declaring that their products were free of such parts.
Gen Chauhan also referred to this broader challenge during his interaction, pointing to the limitations of scrutiny in an increasingly complex supply chain.
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More than just Chinese parts
Officials ThePrint spoke to said white labelling is a much wider issue than merely the use of Chinese parts.
As procurement policies increasingly favour Indian companies, many domestic firms have entered into arrangements with overseas manufacturers.
While several partnerships involve genuine technology transfer and local manufacturing, others involve little more than importing complete systems and selling them under an Indian label.
One example dates back to December 2020, when the Indian Navy signed a contract with an Indian company for anti-drone fire control systems designed to improve a soldier’s accuracy while countering low-flying drone threats.
Soon after the contract was announced, an Israeli defence company issued its own statement claiming it had secured the order from the Indian Navy.
It subsequently emerged that the Indian company had acted primarily as the local supplier for the Israeli system.
Industry observers said similar instances are not uncommon. A number of Indian defence companies, including some of the big private players, maintain a big catalogue of products carrying Indian names even though the underlying systems are sourced almost entirely from foreign manufacturers.
Why experts are worried
Former Eastern Army Commander Lieutenant General R.C. Tiwari (Retd) said white labelling strikes at the very foundation of India’s quest for defence self-reliance “White labelling goes against the spirit of ‘aatmanirbharta’ in defence. If a country is not self-reliant in the field of defence, it will remain forever at the mercy of other countries,” he told ThePrint.
According to him, the practice creates an additional layer of strategic vulnerability.
“When India imports equipment directly from another country, there is an understanding between the two governments regarding quality standards, maintenance support and long-term supply commitments. That assurance may not exist when an Indian company passes off a foreign product with negligible or no indigenisation,” he said.
The recently-retired officer said that there have been instances where a foreign company passed on an inferior product to the Indian company.
He added that the problem is not confined to the private sector.
“Even public sector undertakings have followed similar practices in the past. When we describe something as ‘Made in India’ even though it is largely imported, it damages India’s credibility. It is not merely a national security concern, it also affects the country’s reputation,” he said.
Wrong parameters
Group Captain Ajay Ahlawat (Retd) believes the existing policy framework itself encourages white labelling because success is often measured using the wrong parameters.
“The civilian leadership in the defence ministry tends to view self-reliance through production figures and procurement statistics. While more equipment is indeed being produced domestically, we continue to depend on foreign suppliers for critical technologies and key components,” he said.
According to Ahlawat, the yardstick for self-reliance should shift from localisation percentages to sovereign control over defence systems. He argued that sovereign control should be assessed at two levels—software and hardware.
The first is ownership of intellectual property, including software, source code and design authority. The second is the ability to manufacture, repair and upgrade the system within India without dependence on foreign suppliers.
Interestingly, current methods of assessing indigenous content often include relatively low-value elements such as packaging, wiring, paintwork and exterior casings. Such accounting can produce high localisation percentages while the most critical technologies including sensors, processors, propulsion systems and software continue to remain imported.
(Edited by Amrtansh Arora)
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