Driven by the goal to reach self-reliance and reduce dependence on foreign equipment, India has launched a the "Make in India" initiative to promote and encourage domestic defense production. This initiative will address a national desire for economic and strategic autonomy and would save foreign exchange.

The government previously created defense production capabilities in the form of ordnance factories and public sector undertakings to cater to the requirements of India's armed forces. Now there is a need to enlarge the role of the Indian private sector as well as develop capabilities and capacities for the production of military equipment.

Outlook 2017: Perspectives from global thought leaders

Over the last 70 years, India has created a robust industrial base with the aim of transforming the country from a net importer to a net exporter of defense equipment in the coming years through its Make in India campaign.

This year, the Defence Procurement Procedure (DPP-2016) was launched to boost this new initiative, and a new category was introduced under the indigenously designed, developed and manufactured (IDDM) provisions, which will encourage the defense industry here.

Having recognized the importance of indigenous design and development, the government has for the first time prioritized domestic manufacturing as well as granted "pride of place" for design and development as a part of the procurement process.

Priority of procurement is the mantra for Make in India. In addition to the above, there is also the Make in India category of procurement, which now enables the armed forces to select programs for consideration under that category.

In another example, the category of Buy IDDM encourages purchases from Indian sources that incorporate indigenous design, development and production. This essentially means that the design has to be indigenous, development has to be indigenous, and production or the manufacturing process has to be indigenous.

However, the government feels there could be occasions when such conditions cannot be met by domestic industry, due to its evolving nature. Therefore, the Ministry of Defence (MoD) has also considered a non-indigenous design and development proposal as part of this category. This means a non-indigenous solution by industry that incorporates a non-indigenous design and development could also be categorized under procurement. The government is aware of the infant nature of the defense industry, especially in the private sector; so as to help the sector evolve, the government is allowing design by foreign companies, while taking steps to encourage indigenous manufacturing. If the design and development is indigenous, then an indigenous manufacturing content of 40 percent could suffice; if the design and development is non-indigenous, then a 60 percent indigenous content is mandated. Thus the MoD has taken care of both the requirements, namely, design/development as well as manufacturing in the same category.


The government needs to have strategic partnerships (SP) to encourage the private industry into the defense acquisition process. If we can grant contracts to defense public sector undertakings on a single-tender basis, then we must also be able to provide our private industry tenders on a single-tender basis. This can be achieved if we have SPs. The concept of SPs is that we identify from our private industry those that meet given criteria for a given discipline, such as aircraft, helicopters, missile systems, guns, materiel, submarines, surface ships, tanks, and other specialist vehicles, small arms and ammunition, and so on.


Industry now has multiple options to meet the requirements of the armed forces through indigenous design and development. They could invest in design and development in an organic manner, thus investing heavily in researchers' development.

In conclusion, the government has done well to incentivize industry to strive for indigenous design, development and manufacturing. Indian armed forces are deployed in intimidating Indian conditions — and for the Indian conditions in which they are deployed, they require Indian solutions. Innovation is the key to meet the immediate needs of the armed forces, and innovation can happen only when one attempts an indigenous solution. It is now for the industry to come up with models to achieve "Make in India in Defence" its true spirit.

Ganesh Raj is an expert in aerospace and defense with Ernst and Young India.

Share:
More In Outlook