Munitions have been opened to the private industry with considerable lag after weapon systems. User requirements of munitions could be broadly categorized under extant in-service munitions, which are almost 80-90 per cent indigenous. Imported munitions, components and advanced munitions are yet to be developed or procured. Each of these categories calls for a different policy paradigm. While technology for munitions presently being produced indigenously could easily be transferred to the private industry to enhance the capacities at the national level, it would entail duplication of efforts, besides loss of revenue for defence PSUs, Munitions India Ltd (MIL) and Yantra India Ltd (YIL).
On the other hand, if the private sector focuses primarily on import substitution through Make in India projects and design & development of advanced munitions, with no assurance of successful outcomes, low or no return on investment (ROI) on huge initial investments will not enthuse the private sector.
Ammunition is procured through both DAP-2020 (Capital) and DPM-2009 (Revenue) routes. Unlike weapon platforms, development of munitions calls for experimentation in the real world, with real weapon systems and platforms, which most private players are unlikely to have. Therefore, the munitions ecosystem has nuanced dynamics and calls for a flexibility in relevant policies and approach.
Armed Forces’ Perspective
The armed forces require advanced, smart, precision-guided, beyond line of sight (BLOS), loitering and intelligent munitions, for land, naval and aerial weapons alike.
Advanced munitions requirements are centered on autonomous/ man-in-loop munitions, modular and dual band, jam resistant sensors and guidance, dual CCD, cooled and uncooled seekers, pulsed motor/ SFDR/ ramjet propulsion and penetration-cum-blast/blast-fragmentation warheads.
The armed forces are also looking for munitions and payloads for unmanned platforms – anti-personnel, anti-tank, kamikaze, EW, loitering and Swarms.
For existing inventories the armed forces would like to have range extension and precision guidance kits.
In particular, the Indian Air Force (IAF) would also like to see indigenisation of electronic fuzes, indigenous immune GPS and ECM/ECCM. In addition, seamless integration of munitions/ missiles with platforms and provision of battle management systems for the munitions was required.
The Navy would also like to see indigenization of underwater systems, missiles, fuzes, torpedos, mines, gun ammunition, counter-drone systems and chaff.
The Ministry of Home Affairs (MHA) was earlier procuring small arms (SA) ammunition from Ordnance Factory Board (OFB). With creation of Munitions India Ltd (MIL), a corporate entity, procurement, QA/QC and testing policies and procedures need a review.
Import dependence for ammunition of Tavor Rifles, AMR, AGL, Dragunov Sniper Rifle, UBGL, MGL should be overcome and accorded priority.
Similarly, indigenous advanced materials and alloys are required and dependence on import should be reduced.
Atmanirbharta in Munitions
The Indian armed forces exploited precision munitions during the 1999 Kargil War with great effect and during the Balakot Strikes (2019). Thus was felt the inescapable need to develop smart and precision munitions.
There have been policy shifts to enhance the role of private industry and MSMEs to strengthening the ecosystem for munitions. Many barriers like capping of number of bids, criteria for financial eligibility and credit rating have been removed by the Government through considerable relaxations.
In 2016 the Government kick started “Manufacturing of Ammunition for Indian Army by Indian Industry” and issued RFPs in 2017, which were duly amended based on the market response. Four of the 12 projects have reached the trial stage. The three positive indigenisation lists promulgated in the recent past list nearly 50 items of ammunition, including Guided Extended Range Pinaka Rockets, Advanced Light Weight Torpedos, Anti-Radiation Missiles and Loitering Munitions. This reflects the confidence of the Government in R&D and manufacturing prowess of the domestic defence industry.
DRDO-Industry Special Purpose Vehicles (SPV) are allowed to develop essential advanced defence products.
Sixty eight per cent of the capital acquisition budget has been earmarked for the domestic industry in 2022-23 and 25 per cent of the domestic capital procurement budget earmarked for promotion of private industry, MSMEs and start-ups.
The scope of Defence Innovation Start-Up Challenges and Technology Development Fund has been expanded to create more opportunities for them.
Industry Perspective
As compared to the view prevailing about 10-20 years ago, the armed forces have better confidence in private industry and defence PSUs is high on their ability to meet their requirements. This has been substantiated by 11 tenders which were issued for munitions between March 2021 and May 2022, are under the Category of Make in India, spanning a 10-year requirement.
The armed forces have demonstrated a flexible and pragmatic approach through interactive RFPs.
The Industry thinks that rate contracts, with agreed variable rates over time, would be more viable for contracts spanning 10 years, as for munitions.
Make 1 and 2 Categories. Make 1 & 2 are unviable for rockets/ missiles and certain advanced munitions, considering the time and costs involved in the development of the prototypes. Integration kits for aerial munitions carry a high cost of Rs 14 Cr per aircraft, rendering Make 2 unviable.
Another case in point is the timeframe provided for responding to Expression of Interest (EoI) for TGMs for 155mm, where five prototypes were sought in 30 weeks, a product with a CEP of 10 meters, GPS, laser designator, ECM/ ECCM features, all of which required R&D, time and funds. Foreign original equipment manufacturer (FOEM) may not be willing for ToT for Make 2, since a prototype may not result in an order eventually, whereas, for Buy Indian category, even 60% Indian content (IC) may be achievable with a contract in the hands of the Indian Partner.
FOEMs are likely to exploit the opportunity by partnering with Indian companies, many of which are already exporting items based on competitive advantage in quality and not costs.
Due to peculiar restrictions on FOEMS, ToT and IPR for munitions are more challenging than for other weapons and systems. Moreover, percentages of IC stipulated at 50%-60% are unviable at the prototype stage, and must be lowered. 100 per cent indigenisation was not feasible since the FOEM may not hold IPR for 100 per cent components. In case the material itself was not available in India, it should not be included while determining policy on IC percentage.
Though 12 RFPs were initiated for procurement of munitions from private industry in 2017, the procedures and outcomes did not inspire much confidence, since there were several amendments issued, only four had reached the trial stage and no order had fructified in five years. Three months timeframe is too short for responding to RFPs for tank/ artillery munitions.
PPP or SPV models would be more suitable for missiles, rockets and advanced munitions.
Industry feels that even if its products do not meet 100% QRs, a certification stating the extent to which the product met the criterion would help the industry offer the product for exports.
Though the licensing norms had been opened up and liberalised, not more than 15-20 licenses had been approved for munitions.
Research & Development
Smart and advanced weapons include components like Inertial Measurement Units (IMU), seekers and Servo actuator motors, which are still imported. The Government needs to provide financial support for design and development.
The Industry feels that transfer of technology (ToT) to the Industry from DRDO is feasible for technologies like thermobaric munitions. For kinetic munitions, where explosives do not play a major role, ToT should be to the OEM for the kinetic component, and not the partner for explosives.
Development cum Production Partner (DcPP) route could result in different types/ models of the same item, creating larger inventories.
Quality Control
Users are concerned about quality, cost, timely delivery and surge capacity. Munitions should be usable and stay stable over a wide temperature range of -40 deg to +50 deg Celsius. The ineffectiveness of thermobaric/blast munitions in high altitude areas could be factored in while framing user requirements.
Accident occur every four days. Quality is of concern when it comes to propellants, batteries, mines, primers and casings.
Replenishment and life extension of missile systems, which entail testing, refurbishment, safety, servicing and reliability, could be addressed through long term JVs of over 20-30 years.
Apportioning the process QA/ QC responsibility to the manufacturers is deemed an enabling provision.
Small Arms/ Mines/ Explosives are stored for decades, and have a long product life. They are safe and life extension procedures are in place. DRDO/ HEMRL/ DGQA and also the industry have set up state-of-the-art facilities for testing and ensuring shelf life in terms of quality and reliability.
Infrastructure
Since the shelf life of munitions exceed 10 years, a manufacturer may secure only one to two orders, resulting in production lines remaining idle and unproductive, unless it is utilised for exports. Private Industry should be allowed to partner with MIL/ YIL/ DPSUs for exports. It is financially unviable to harness critical technologies for limited requirements, eg, BMCS for 155mm and four variants of 155mm shells, both spanning 10 years.
Role of Academia
There is a need for the Services and scientists to study ammunition technologies. IITs have the necessary environment and infrastructure for these studies. MIL has already inked an MoU with the IIT Madras for sponsored M.Tech courses. Collaboration with Academia will ensuring development of reliable products having better design and higher quality standards.
IIT-M only has policy clearance for research in explosives. This should be extended to other Centres of Excellence/ IITs. It has contributed actively especially in the field of Ramjet Technology for 155mm artillery projectiles. Intelligent munitions are being developed in collaboration with IIT Delhi.
IIT Madras has offered to conduct tailor-made post-graduate programmes for Services as well as DPSUs/MIL/YIL/private industry.
BEL has contributed to the development of 125mm FSAPDS, achieving DOP greater than 530mm.
Recommendations
Flexible Policy Approach. For imported ammunition to be developed by Industry, it is not easy to get to the prototype stage with indigenous content which was feasible with the foreign vendors for weapon systems. For setting up a facility in India with a foreign vendor, FOEM is not likely to agree for providing ToT/ IPR, because ammunition licenses are controlled by foreign Governments. Hence, a flexible approach is necessary for munitions.
Bidding Criteria. Various policies including multiple participation by the bidders, financial eligibility, and issue of credit rating may be relaxed further to incentivise industry participation in defence production.
Time to Respond to RFP. The time to respond to RFP for tank/ artillery munitions in a three months timeframe is too short. It should be a minimum of 4-6 months.
Rate Contract. Provision for a Rate Contract for the supply of regular ammunition is recommended. The commercial quotes should remain valid for longer periods. Predictive costing for a period of certain years is not viable due to a large number of intangible attributes in the costing of military goods, therefore, rate contracts provide a viable solution.
Make II Route. Design, development and R&D for the prototype(s) needs time and financial resources. Though the users now prefer the Make II Route, the private companies find it unviable. Make II cases can be a success story for ammunition manufacturing ecosystem in India, only if the Government provides assurance and monetary incentives, and relaxes the Indigenous content criterion on a case-by-case basis.
Make II & III Route. Indian firms may manufacture ammunition either in collaboration or with ToT from foreign OEMs. The restrictions of 60 per cent indigenous content (IC) at the prototype stage should be relaxed. 100 per cent indigenisation is not feasible since the FOEM may not hold IPR for 100 per cent components.
DPSU/MIL + 1 Industry Player. The Model of DPSU/ MIL + 1 industry player can be adopted by the Government. Facilitate and stabilise at least two manufacturers (including MIL) for every type of ammunition.
Share Plans with Industry. Industry should be informed about long/ mid-term procurement plans. More transparency and a collaborative environment are required for better outcome delivery.
Import and Storage of Explosives. It is difficult to store or import ammunition by any private player even if they have an explosive partner. Therefore, private companies and their foreign partners have to depend on Armed Forces for storage, transport and escort. This gives monopoly to DPSUs and a few explosive companies. This needs to be reviewed and redressed.
Munition Ecosystem. Apart from the MoD/ DDP, the industry needs to proactively engage with the Services to establish and nurture a defence ecosystem that would produce quality, state-of-the-art weapon systems.
Timely Supplies. Once the contract is awarded, timely supply is important and post-sale services must be good. Provisions should be made to ensure that slippages and delays result in automatic activation of penalty clauses to enhance accountability.
Time Bound Indigenisation.
Shedding import dependence for ammunition of Tavor Rifles, AMR, AGL, Dragunov Sniper Rifle, UBGL, MGL should be accorded priority.
Bidding of only 12 items from the three lists of Indigenisation (in revenue route) have been opened. Remainder items (starting from Dec 2021 till Dec 2027) have not been opened for bidding. It takes almost three years after the contract is finalized for the Services to get the ammunition. Regular interaction is required between DDP and Industry/DPSUs/ MIL/ YIL to ascertain which route to take -Make II/Make III by industry, or based on Revenue RFI/ RFP or Make-I.
ToT Provisions. It is recommended that for kinetic munitions, where explosives do not play a major role, ToT should be to the primary OEM for the kinetic component, and not to the partner for explosives.
Enhancing iDEX and TDF Outcomes. Based on success and experience gained in these innovative approaches, the provisions should be consistently reviewed and refined.
Incentivisation of Design and Development. To achieve 100 per cent Aatmnirbharta in defence manufacturing, industry needs to foray into niche sectors like the manufacturing of fuzes, seekers, missile engines, etc.
R&D for New Advanced Munitions. Setting up a new design and research organization as an alternative to DRDO, to infuse competition in R&D, is recommended.
New Infrastructure/Capacity DPSUs/ MIL/ YIL should collaborate with the industry to mutually create and develop new infrastructure, including indigenisation of plants for explosives, to design and develop products. The existing infrastructure for ammunition should optimally be used by diversifying the products.
Industrial Licence. License for military equipment (including ammunition) is still delayed compared to the expectations. Transparency is required in the grant or denial of licenses.
While the recent policy initiatives of the Government are welcome, the recommendations of the Industry need to be considered by stakeholders in the right earnest for furtherance of Make in India, fostering the growth of the domestic defence industry and ensuring requisite preparedness of the armed forces.
