Defense Manufacturing Of India Exceeds 1 Lakh Crore For The First Time In FY23

The amount of India‘s defense manufacturing has surpassed Rs 1 lakh crore for the first time in the fiscal year 2022-23, according to the defense ministry on Friday.

The overall value of defense output in the nation in 2021-22 was more than Rs 95,000 crore. The authorities have taken several steps in recent years to boost the domestic defense sector.

“The present sum is 1,06,800 crores (rupees), which will rise further once data from other private military industries is received,” the company stated in a statement.

According to the ministry, the worth of defense manufacturing in 2022-23 will be more than 12% higher than in 2021-22, when it had been Rs 95,000 crore.

According to the report, a variety of policy changes have been implemented to accomplish the goal of simplicity of doing business. Notably, the inclusion of MSMEs as well as start-ups within the supply network.

According to the ministry, defense firms, including MSMEs along with start-ups, are stepping up to design, develop, and manufacture military gear.

“These actions have boosted the nation’s defense manufacturing environment and created significant job opportunities,” it said. India ranks as one of the world’s top weapons importers.

According to projections, the Indian armed services would spend over $130 billion on capital acquisition over the following five years. The administration has decided to increase domestic defense manufacturing to reduce dependency on imported military hardware.

The defense ministry has set an aim of 1.75 lakh crores (rupees) in defense industry turnover by 2024-25. It includes a $5 billion (Rs 35,000 crore) military hardware export target.

Under the Make in India initiative, there has been a strong emphasis on growing local defense manufacturing, encouraging private sector participation, and increasing exports.

The defense expenditure for FY24 is set at 5,93,537.64 crore or 13.18 percent of India’s total budget. According to government figures, India’s defense exports increased 24% last fiscal year to almost 160 billion rupees.

It sells Dornier-228 planes, artillery cannons, Brahmos missiles developed in collaboration with Russia, radars, armed vehicles, missiles and launchers, ammunition, and other equipment.

In the last decade, India has become the world’s largest weapons importer, relying on Russia for approximately fifty percent of its military supply.

However, the crisis in Ukraine has slowed the shipment of Russian supplies that India needs to operate its tanks as well as fighter jet fleets. It includes the supply of Russian airborne defense equipment as well.

India’s defense output is likely to rise further as a result of ongoing reforms and increased participation from private military enterprises. The privatization of the OFB has increased efficiency and competitiveness even more.

In fiscal year 2022-23, India sold military gear worth Rs 15,920 crore, a tenfold increase from 2016-17. Currently, the country exports to roughly 85 countries, with about 100 enterprises involved in the shipments.

To achieve self-sufficiency in defense manufacturing, India has taken a two-pronged approach. To begin with, it has prohibited the importation of weapons and equipment such as fighter planes, and warships, including artillery guns.

Second, it has prioritized the indigenization of subsystems, spares, and components needed for larger armament platforms. To help these attempts, the government has produced several lists of things that will be indigenized during the following five to six years.

Ammunition import replacement has also attracted significant attention. India’s emphasis on defense manufacturing is beginning to bear fruit.

India manufactures a vast variety of weaponry and systems, such as the Tejas light fighter planes, helicopters, battleships, tanks, artillery pieces, missiles, rockets, and combat vehicles.

Although a full category-by-category analysis is not yet available, the overall rise in military manufacturing is a positive indicator. This tremendous rise can be credited to the defense ministry’s constant efforts and the execution of different reforms.

The government has taken initiatives such as prohibiting the importation of certain weapons and systems. Also, establishing an independent budget for local procurement, promoting FDI, and increasing business ease.

Over the last five years, the value of defense manufacturing has nearly doubled. It demonstrates India’s attempts to expand its position as an arms and systems exporter.

In addition, the ministry has authorized four Positive Indigenisation Lists (PIL) containing over 2500 strategically vital LRUs, Sub-systems, Spares, and Components. This week’s approval includes materials of the highest quality and spares with an import substitution value of Rs 715 crore.

In addition, the government has established two DICs to attract a total investment of Rs 20,000 crore for defense industries by 2024-25. It will create domestic supply chains, and boost the country’s military manufacturing ecosystem.

India is in negotiations with Egypt as well as Argentina about possibly selling LCA to their respective air forces. Egypt has predicted a need for 20 aircraft, while South America requires 15 more fighters.

The Dhruv innovative light helicopter is also being considered for export to the Philippines by Hindustan Aeronautics Limited. The previous year, BrahMos Aerospace along with the Philippines agreed to a nearly $375 million deal for the Philippine Marines to purchase three batteries of BrahMos supersonic cruise missiles.

Additionally, KSSL received a $155.5 million export order for providing 155mm artillery guns, the initial such order for an Indian firm. Officials claim that India exports bullet-proof vests to 34 nations, notably Australia, Japan, Israel, and even Brazil.

It exports weapons (ranging from 5.56mm to 155mm) to approximately ten countries, such as the UAE, Egypt, Indonesia, and Thailand. And swiftly interceptor boats to Mauritius, Seychelles, as well as the Maldives.

It also exports defense electronics to the United States, the United Kingdom, and France.

The LCA, various types of helicopters, the Astra beyond-visual-range air-to-air missile, and tanks are examples of weapons and systems with export potential. The corporatization of OFB, which formerly governed 41 ordnance manufacturing facilities, has increased defense output.

It was divided into seven government-owned firms in 2021. Today it manufactures ammunition and weapons of mass destruction, vehicles, arms and supplies, troop comfort products, optoelectronics equipment, parachutes, and associated products.

AWEIL, TCL, IOL, MIL, AAV, GIL, and YIL are the new companies. According to a report published in March by the SSIPRI, India’s arms imports declined 11% between 2013-17 and 2018-22.

Still, the country remains the world’s largest buyer of military hardware. In October 2021, the seven new DPSUs formed from the former Ordnance Factory Board were incorporated as Government firms (wholly controlled by the Indian Government) according to the Companies Act 2013.

The government has taken initiatives to assist while helping these new defense businesses as they establish themselves as corporate organizations.

Outstanding indents with the former OFB received grandfathering and transformed into presumed contracts worth around Rs 70,776 crore for the following five years. These considered contracts provide annual product delivery targets.

Every year, the Services would pay the new DPSUs an advance of 60% of the amount corresponding to that year’s aim. It is following the conditions of use established in the considered contract.

The advances give working capital to newly formed DPSUs. With greater functional and economic independence, these new DPSUs concentrate on expanding their client base.

It includes exports, to increase the volume of defense manufacturing.

Proofread & Published By Naveenika Chauhan