India: Need to Plug in global defence industry supply chain


Atmanirbharta in defence manufacturing has been the subtheme of the larger self reliance in manufacturing and production that was launched as an initiative by the Government of India following the COVID 19 pandemic in the first half of 2020.


With Prime Minister Narendra Modi providing the lead the programme in the defence industry has gathered much momentum. The Ministry of Defence every week organises at least one programme where the theme of Atma Nirbharata is highlighted.


Logic of Atma Nirbharata


Given disruptions in the supply chains that were evident with countries going in for lockdowns and limited movement of personnel or goods, the objective was to create self sustaining defence supply chains within the country.


Weapons and equipment are strategic manufacturing assets and thus indigenisation of production will add to the overall degree of strategic autonomy that a country will enjoy in case of disruptions.


While there is an impression that the era of state on state wars is passe, increasing trend of armed conflicts across the world in recent years indicates otherwise


Russia Ukraine War is no doubt the largest of wars being fought by states in recent years, but there have been others such as Azerbaijan and Armenia or Ethiopia and Eritrea that have rocked the world.


Importantly sanctions by the United States and Europe on Russia have been widest on Russian defence industry, thus disruptions in the supply chain have a wider impact especially for countries as India.


Thus, apart from an aspiration to overcome the shackles of defence imports, Atma Nirbharta makes much strategic sense.


Promoting Domestic Defence Industry


Apart from restricting imports through mandated lists which have now been named as Positive Lists, the Ministry of Defence has focused on promoting indigenous defence industry during the 12th Edition of DefExpo 2022.


Officially known as the Land, Naval & Homeland Security Systems Exhibition will be held from 18th to 22nd October 2022 at Gandhinagar, Gujarat, India.


The Exhibition will be held at Helipad Exhibition Centre (HEC) and Inaugural/official functions & seminars will be held at Mahatma Mandir Convention and Exhibition Centre (MMCEC).


The Def Expo 2022 claims that this is the largest ever edition of the DefExpo and includes live demonstrations showcasing equipment and skill set of the armed forces, DPSUs and industry with ship visits for general public at Porbandar from 18-22 October 2022. A Drone show is also planned both at Gandhinagar and Ahmedabad.


The catch however is restrictions on participation by defence exhibitors.


Only Indian companies / Indian Subsidiary of Foreign OEM / Division of Company registered in India / Exhibitor having a Joint Venture with an Indian company will be considered as Indian participant as per the guidelines for registration.


This virtually rules out participation by foreign companies who may be interested in exhibiting their potential or seek partnerships with Indian companies who have developed niche capabilities.


Insular Supply Chains -Counter Intuitive


The objective appears to be to showcase the expanse and depth of the Indian defence industry.


This may be counter intuitive to the objective of India becoming a global defence manufacturing hub as declared by Union Defence Minister Rajnath Singh who declared that,

“India will soon become a global manufacturing hub. We are taking big strides towards ‘Aatmanirbhar Bharat’ as envisioned by our Prime Minister Narendra Modi. We will soon achieve self-reliance in defence. Our aim is to reduce dependency on imports and increase defence exports.”


“The aim of DefExpo-2022 is to build upon the vision to achieve ‘Aatmanirbharta’ in defence and reach USD five billion defence exports target by 2024. The objective is to make India a major destination of land, naval, air & homeland security systems and defence engineering. Keeping with future warfare in mind, the event aims to recognise the impact of disruptive technologies on conflicts and its consequent impact on the equipment and platforms required,’ the Minister said.


If that is the objective, then plugging India in the global defence manufacturing supply chain

assumes importance.


Structure of Global Defence Industry – An Overview


The structure of the global defence industry denotes a number of mutually self-supporting and only China an independent supply chains to broadly include the following: -

  • United States – UK – Europe - Israel

  • Europe

  • Russia with Ukraine forming an important component in the past.

  • China – Russia

  • China

  • Japan – United States

  • South Korea United States

  • South Korea, Australia, Indonesia evolving

  • Australia, UK, US evolving.

India’s Option


Given this architecture India must plug in to one or more of the above in the initial stages and move on to create one around itself in the future.


The present approach of mix and match with several foreign manufacturers despite the ambitious Atma Nirbharta programme is not conducive to meeting India’s aspirations of a defence industrial hub.


While China to some extent has succeeded in creating one this was with exploitation of dual use technologies, partnership with Russia and reverse engineering. This is not an ideal model.


Opportunity for India for plugging in global defence supply chains have emerged with the India U.S. expanding defence technology and trade competition though presently this is mainly in terms of exports by the United States.


Russia which is facing sanctions can also become a vector in this supply chain realistically for mutual advantage.


Conclusion


Exclusivity in global defence manufacturing is limited to critical platforms such as nuclear submarines, conventional arms production is spread across supply chains of like-minded partners.


Defence production skills building and transfer of technology can only come through being a part of the global defence supply chain. India should not be purblind to this reality.

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