Introduction
In a significant and ambitious move, the Modi government introduced comprehensive defense reforms in 2023, aiming not only to fortify India's national security but also to propel the nation at the forefront of global defense manufacturing.
This article provides an in-depth exploration of the multifaceted aspects of these reforms, encompassing the pivotal role of the Defense Planning Committee (DPC), challenges in defense budget allocation, the overhaul of the defense acquisition system, and the notable triumphs in defense exports.
"File:Prime Minister Narendra Modi celebrates Diwali with ITBP and Army Jawans in Sumdo village, Himachal Pradesh.jpg" by Prime Minister's Office, Government of India is licensed under CC BY-SA 2.0.
The Defence Planning Commision
In a significant move towards defense reform, the Modi administration initiated the establishment of the Defence Planning Committee (DPC) in April 2018, with the National Security Advisor (NSA) appointed as its chairperson. This move also involved the NSA taking over the role of the chairman of the Strategic Policy Group (SPG), one of the three-tier structures within the Prime Minister-led National Security Council (NSC), replacing the Cabinet Secretary.
The primary objective behind the creation of the DPC was to address the longstanding deficiency in comprehensive and integrated defense planning within the Ministry of Defence (MoD), a gap persisting since the aftermath of the 1962 war.
Empowered with the task of formulating a national security strategy, developing an all-encompassing defense plan that considers the critical needs of the armed forces alongside resource constraints, and formulating an extensive Research and Development (R&D) and manufacturing plan, the DPC plays a crucial role in rectifying historical inadequacies. Its mandate necessitates the following key initiatives:
1. National Security Strategy: The DPC is expected to articulate a comprehensive National Security Strategy that delineates the primary security challenges and objectives.
2. Long-Term Integrated Perspective Plan (LTIPP): The committee is tasked with crafting a genuinely prioritized and realistic 15-year LTIPP. This plan should also encompass five-year and Services Capital Acquisition Plans (SCAP), taking into consideration both inter- and intra-service priorities. The aim is to concentrate on the armed forces' capability development, addressing the diverse requirements of modern warfare.
3. Roadmap for Defense R&D and Manufacturing: The DPC is expected to lay out a strategic roadmap for defense Research and Development (R&D) and manufacturing. This roadmap should actively support the 'Make in India' initiative and strive towards achieving self-reliance in defense procurement.
The Defence Budget
Addressing the financial aspects of defense expenditure, the Ministry of Defence (MoD) operates with a budget of Rs 4,31,011 crore as outlined in the Interim Budget 2019-20, constituting 15.5 per cent of the total central government expenditure (CGE). Notably, a substantial portion of this budget is allocated to manpower costs, encompassing Pay and Allowances, and Pensions.
This allocation has witnessed a significant increase post the implementation of the Seventh Central Pay Commission (CPC) and the One Rank One Pension (OROP) scheme. Consequently, the capital procurement budget, crucial for defense modernization, has experienced a decline in its share within the overall budget. Over the years, spending on modernization has dwindled from 26 per cent of the MoD's expenditure in 2011-12 to 18 per cent in 2018-19.
To optimize resources, the MoD has initiated the implementation of recommendations proposed by the Committee of Experts (CoE), chaired by Lt. Gen. (Retd.) D.B. Shekatkar. The CoE was tasked with suggesting measures to "enhance combat capability and rebalance defense expenditure." Accelerating the implementation of pending reform measures from the CoE's recommendations is essential to realize the intended objectives.
Specifically, the government has been advised to consider the following actions:
1. Budget Increase: Gradually augment the MoD's budget from the current proportion of 2.1 percent of GDP to a minimum of 2.5 per cent, ensuring adequate financial support for defense requirements.
2. Manpower Rationalization: Review the existing period of color service to streamline manpower and contain the pay and allowances portion of the defense budget.
3. Pensionary System Reform: Explore the viability of implementing the National Pension System (NPS) or a suitable variant to prevent defense pensionary liability from becoming unsustainable. The new system should be tailored to accommodate the unique nature of the tenure and work environment of armed forces personnel.
4. Public Private Partnership (PPP) Model: Expedite the process of transitioning all industrial establishments, including Base Repair Depots (BRD), Army Base Workshops (ABW), and Naval Dockyards, under the Public Private Partnership (PPP) model to enhance efficiency and resource utilization.
5. Land Utilization: Investigate the option of generating revenue by commercially utilizing unused and underused defense land, thereby optimizing the potential of available resources.
The Defense Acquisition System: A need for overhaul
The Defense Procurement Management System, initiated in 2001, grapples with inefficiencies stemming from a complex organizational structure and decentralized processes. The Comptroller and Auditor General of India (CAG) highlighted diffused accountability, a cumbersome committee system, and challenges in qualitative requirements (QR) formulation, leading to complications in procurement.
To address these issues, the Ministry of Defence (MoD) has been implementing the following recommendations:
Establishment of Department of Defence Acquisition (DDA)
Dedicated Trial Command and QR Cell
Robust Costing Cell
Professionalization of Acquisition Staff
Make in India in Defense
Under the Make in India initiative, the government has implemented various measures to bolster indigenous defense manufacturing. These include simplifying industrial licensing, increasing the foreign direct investment (FDI) cap, ensuring a level-playing field for the private sector, and introducing export promotion measures. The Ministry of Defence (MoD) has also announced an ambitious defense production policy, launched defense industrial corridors, and identified items for local purchase preference.
To further strengthen India's defense manufacturing base, the MoD may consider the following measures:
Strategic Industry Support: Introduce 'Buy India' in Defense Production Policy, focusing on items where Indian industry excels.
Enhanced Accountability and Market Presence: Corporatize Ordnance Factory Board (OFB) and explore potential public listing for increased accountability.
Market Presence for DPSUs: List unlisted DPSUs in the stock market to enhance corporate governance and public accountability.
Defense Industrial Consolidation: Consolidate defense shipyards into one or two corporations to strengthen competitiveness in domestic and foreign markets.
R&D Investment and Technology Transfer: Mandate 5-7% turnover for R&D in DPSUs and OFB, and modify the offset policy to facilitate technology transfer.
Timely Implementation and Private Sector Engagement: Ensure time-bound execution of private sector orders to sustain engagement in defense production.
Dedicated Defense Education: Establish Indian Institute of Defence Science and Technology (IIDST) focusing on disciplines related to defense technology.
Oversight for Effective DRDO Projects: Supervise ongoing DRDO projects, addressing potential time and cost overruns for effective development.
Reducing Import Dependency: Identify and address causes of high import dependency on parts, components, and raw materials.
Boosting Defense Exports: Pursue SOP for Lines of Credit to boost defense exports, tasking Defense Attaches with promoting exports in various missions.
Defense Exports
India has achieved a historic milestone in its defense exports, witnessing a remarkable surge from Rs. 686 Crore in FY 2013-14 to nearly Rs. 16,000 Crore in FY 2022-23. This 23-fold increase underscores India's substantial progress in the global defense manufacturing sector. With exports spanning over 85 countries, the Indian defense industry has showcased its prowess in design and development, boasting 100 firms currently involved in exporting defense products.
To bolster defense exports, the government has implemented a series of policy initiatives and reforms over the past nine years. Export procedures have been streamlined, made industry-friendly, and shifted to an end-to-end online export authorization system, reducing delays and enhancing the overall Ease of Doing Business.
Additionally, the Atmanirbhar Bharat initiatives have played a pivotal role by promoting indigenous design, development, and manufacturing of defense equipment within the country. This approach aims to decrease dependency on imports in the long run. Notably, the expenditure on defense procurement from foreign sources has dropped from 46% of the overall expenditure in 2018-19 to 36.7% as of December 2022.
India, once predominantly recognized as a defense equipment importer, now exports a diverse range of major platforms. These include aircraft like the Dornier-228, artillery guns, Brahmos Missiles, PINAKA rockets & launchers, radars, simulators, and armored vehicles. The global demand for India's indigenous products, such as the LCA-Tejas, Light Combat Helicopters and MRO activities, is witnessing a notable upswing.
Some other key highlights of the current state of India’s export game is as follows;
- India achieved its highest-ever defense hardware exports in FY 2022-23, totaling ₹15,920 crore, a tenfold increase since 2016-17.
- Prime Minister Narendra Modi attributes the surge to Make in India enthusiasm and key reforms fostering growth in the defense sector.
- Defense exports steadily increased over the years: ₹1,521 crore in 2016-17, ₹4,682 crore in 2017-18, ₹10,745 crore in 2018-19, ₹9,115 crore in 2019-20, ₹8,434 crore in 2020-21, and ₹12,814 crore in 2021-22.
- India exports a range of military hardware, including missiles, ALH, offshore patrol vessels, personal protective gear, surveillance systems, radars, Tejas aircraft, helicopters, artillery guns, Astra missiles, Akash missile systems, tanks, sonars, and ammunition to approximately 85 countries.
- The government's strategy and action plan, supported by forward-looking policies, aim to achieve self-reliance in defense and establish India as a net exporter of weapons.
- In the 2022-23 defense capital procurement budget, India allocated 75% for locally made weapons and systems to promote self-reliance and boost defense exports.
- The share of the domestic sector in the defense budget increased, with 68% allocated for indigenous purchases in 2022-23, compared to 64% in 2021-22 and 58% in 2020-21.
- Approximately ₹1 lakh crore has been set aside for domestic procurement in the current year, a significant increase from the previous three years.
- The government restricted the import of hundreds of weapons and systems to boost indigenous defense manufacturing.
- Despite a decline in arms imports, India remains the world's largest importer of military hardware, according to the Stockholm International Peace Research Institute.
- The value of India's defense production crossed ₹1 lakh crore in 2022-23, a substantial increase from ₹54,951 crore five years ago.
- India aims for a turnover of ₹1,75,000 crore in defense manufacturing by 2024-25.
Indian Defense under PM Modi
Under Prime Minister Modi's leadership, several key achievements have marked India's defense sector:
1. Surgical Strikes: In response to the Uri attack in September 2016, India conducted surgical strikes in Pakistan-occupied Kashmir, signaling zero tolerance towards terrorism and showcasing the Indian armed forces' agility and determination.
2. Airstrikes and Counter-terrorism Measures: Following the Pulwama attack in 2019, India retaliated with airstrikes on the Jaish-e-Mohammed terrorist camp in Balakot, inflicting significant damage to terrorist infrastructure.
3. National War Memorial Dedication: The inauguration of the National War Memorial by PM Modi honored the sacrifices of over 26,000 martyrs since India's independence, paying tribute to their valor and selflessness.
4. Modernization of Ordnance Factory Board (OFB): Transformation of the OFB resulted in the emergence of seven new defense companies, fostering research, industry engagement, and a notable surge in defense exports.
5. Appointment of Chief of Defense Staff (CDS): The Modi government made history by appointing the first Chief of Defense Staff, facilitating better coordination and resource utilization across the army's divisions.
6. Inclusion of Women in Armed Forces: Significant steps were taken to integrate women officers and jawans into various roles within the armed forces, promoting gender inclusivity.
7. Implementation of One Rank One Pension (OROP): A long-pending reform, OROP was implemented, benefiting over 20 lakh pensioners and providing direct monetary support through the Sparsh scheme.
8. Indigenous Defense Capabilities: The induction of the first indigenous aircraft carrier, INS Vikrant, and the commissioning of INS Kalvari S-2 submarine showcased India's self-reliance in defense manufacturing.
9. Relief and Rescue Operations: The armed forces actively engaged in humanitarian missions, conducting evacuation efforts, and providing relief during various natural disasters and crises.
Conclusion
India's defense reforms of 2023 signify a strategic leap towards self-reliance and global leadership in the defense sector. Alongside other initiatives like the Digital India movement, the Indian defense sector is poised to undergo numerous changes.
But the journey doesn’t end here as constant work is required on the part of the Government and the Defence Industry. Gone are the days when every defense programme was riddled with scams. The Indian defense is set to enter a new age and PM Modi is leading it from the front.
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