Indian Defence Industry: Issues of Self-Reliance

2013 |
Monograph

IDSA Monograph Series No. 21

The monograph makes an attempt to estimate India’s defence self-reliance index, which has been a subject of intense debate in recent years. It also surveys the key recommendations of various high level committees set up by the Indian government post the Kargil conflict. A critical analysis of various policy measures taken or contemplated by the Ministry of Defence to facilitate higher indigenous production has also been made. The monograph concludes with key policy measures to revitalize India’s moribund defence industry.

About the author

Dr Laxman Kumar Behera is Research Fellow at Institute for Defence Studies and Analyses (IDSA), a premier think tank under India’s Ministry of Defence. As a member of the IDSA’s Centre of Defence Economics and Industry, Dr Behera has vertical specialisation on issues related to Arms Procurement, Defence Offsets, Defence Industry, Military Spending, and Defence Cooperation. He was closely associated with two high-level Committees set up by the Indian MoD on Defence Acquisition and Defence Expenditure. He was a Consultant to the Task Force on Self-Reliance and Defence Modernisation constituted by the National Security Council Secretariat (NSCS), Government of India. Dr Behera held the prestigious ICCR Chair, India Studies, at Fundação Getulio Vargas (FGV), Rio de Janeiro, Brazil.

1. Indian Defence Industry: The Journey to Make in India
  Defence Industrialisation Phases
  Can the Indian Defence Industry Make in India?
2. Ordnance Factories
  Origin and Growth
  Management
  Employees, Production, Sales and Accounting
  R&D and Technology Absorption
  Execution of Orders
  Pricing of OFB Products
  Quality of Products
  Exports
  Capacity Utilisation and Impact of Modernisation
  Poor Inventory Management
  Outsourcing and Vendor Development
  Corporatisation
  Challenges from the Private Sector
  Conclusion
3. Defence Public Sector Undertakings
  An Overview
  From Nomination to Competition
  Defence Procurement: Share of DPSUs
  Indirect Import
  Vendor Development and Outsourcing
  R&D and Technology Assimilation
  Value Addition
  Labour Productivity
  Analysis of Profit Margin
  Exports
  Disinvestment and Listing on Stock Exchanges
  Conclusion
4. The Private Sector
  Why Private Sector in Defence Production
  Defence Production: The Role and Scope of the Private Sector
  Private Sector’s Contribution to Capital Acquisition
  What has Hindered Private Sector’s Participation
  Can the Make in India Initiative Save the Private Sector?
  Conclusion
5. Defence Research and Development Organisation (DRDO)
  DRDO: Origin and Growth
  DRDO’s Performance: An Overview
  DRDO’s Performance: A Critique
  Defence R&D: The Problem Areas
  Conclusion
6. Offsets
  Evolution of Defence Offset Policy
  Part I
  Impact Analysis
  
  Part II
  Lessons from International Practices
  Conclusion1
7. Review of Policy Recommendations
  Group of Ministers
  Kelkar Committee
  Sisodia Committee
  Rama Rao Committee
  V.K. Misra Committee
  Dhirendra Singh Committee
8. An Agenda for Make in India
  Set up a Make in India Council within MoD
  Articulate an R&D and Manufacturing Plan
  Appoint an Additional Secretary within the DDP for thePrivate Sector
  Reform the OFs and DPSUs
  Revitalise DRDO
  Provide Conducive Financial and Procurement Framework tothe Private Sector
  Streamline Defence Offset Policy
  Curb Indirect Import
  Involve the Industry in the Formulation of QualitativeRequirements (QRs)

ANNEXURES

Annexure A – DPP-2016: An Overview173

Annexure B – Strategic Partnership: An Overview of the Aatre Task ForceReport183

Annexure C – Foreign Investment Proposals Approved in Defence Sector (As on July 2015)187

Annexure D – Details and Status of Major Ongoing Projects(Cost above Rs. 100 crore) of DRDO

Index

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Keywords: Defence Industry, India