The decision by the defence acquisition council (DAC), India’s top weapons procurement body, builds on the push for self-reliance in the defence manufacturing sector.

The council accorded its acceptance of necessity (AoN) for 225 BrahMos missiles, Shakti electronic warfare systems and 60 utility helicopters for the navy, around 300 advanced towed artillery gun systems (ATAGS) for the army, the long-range stand-off weapon for the Indian Air Force’s Sukhoi-30 fighters, and nine advanced light helicopters for the coast guard.

Under India’s defence procurement rules, the council’s AoN is the first step towards buying military hardware. The DAC’s clearance for the military hardware is under the most important category of acquisition for indigenisation under the defence procurement policy, or the Indian-IDDM category. IDDM stands for indigenously designed, developed and manufactured.

The government will spend the lion’s share of the money on boosting the navy’s capabilities. The BrahMos missiles, Shakti EW systems and utility helicopters for the navy are estimated to cost ₹56,000 crore, the defence ministry said.

“While the additional BrahMos missile systems will enhance the maritime strike capabilities and anti-surface warfare operations, the utility helicopters will multiply the operational readiness of the Indian Navy for search and rescue operations, casualty evacuation, and humanitarian assistance disaster relief. The EW systems will equip and modernise frontline warships to counter any action by the adversaries,” it said in a statement.

The 155mm/52-caliber ATAGS will be bought for the army along with high mobility and gun-towing vehicles, the ministry said. The Defence Research and Development Organisation (DRDO) began the ATAGS project in 2013 to replace older guns with modern ones. It partnered with two private firms, Bharat Forge Limited and Tata Advanced Systems Limited, for manufacturing the gun. It has a range of 48 km.

A prototype of the gun was used for the ceremonial 21-gun salute for the first time at the Independence Day function at Red Fort last year, along with British guns traditionally used for the event. In his speech, Prime Minister Narendra Modi made a special mention of the indigenous artillery gun as he called for furthering self-reliance in different sectors.

The DAC also cleared the development and production of medium speed marine diesel engines under the ‘Make-I category’ for the first time. “India is venturing into the development and manufacturing of such engines indigenously to achieve self-reliance and leverage the capabilities of the industry towards the goal of Aatmanirbhar Bharat,” the ministry said.

‘Make-I’ is category of capital acquisition in the Defence Procurement Procedure (DPP), and the cornerstone of the Make in India initiative that seeks to build indigenous capabilities through the involvement of both public and private sector.

‘Make-I’ refers to government-funded projects while ‘Make-II’ covers industry-funded programmes. Another sub-category under ‘Make’ is ‘Make-III’ that covers military hardware that may not be designed and developed indigenously, but can be manufactured in the country for import substitution, and Indian firms may manufacture such hardware in collaboration with foreign partners.

The DAC has so far granted AoN for capital acquisition in 2022-23 for projects worth over ₹2.71 lakh crore ($32.77 bn), of which 99% procurement will be done from the domestic industry, it added.

The latest DAC clearance comes on the back of the defence ministry signing on March 7 two separate contracts with Hindustan Aeronautics Limited (HAL) and Larsen & Toubro for 70 HTT-40 basic trainer aircraft and three cadet training ships, respectively, with the orders worth ₹9,900 crore set to boost self-reliance.

Apart from creating a separate budget for buying locally made military hardware, the government has taken a raft of steps to promote self-reliance in the defence manufacturing sector including increasing foreign direct investment (FDI) from 49% to 74%, and notifying hundreds of weapons and systems that cannot be imported.

At Aero India 2023, the defence minister announced that India had earmarked 75% of this year’s defence capital procurement budget for buying weapons and systems from local manufacturers, with the move aimed at unlocking new opportunities for achieving self-reliance targets and ramping up the country’s defence exports.

The share of the domestic sector in the defence budget was never higher. India set aside 68% of the military’s capital acquisition budget for making indigenous purchases in 2022-23, 64% in 2021-22, and 58% in 2020-21.

Around ₹1 lakh crore has been set aside for domestic procurement this year, compared to ₹84,598 crore, ₹70,221 crore and ₹51,000 crore in the three previous years.

Singh had earlier indicated that India could bring more weapons and systems under an import ban, and manufacture them in the country to give a new push to self-reliance. So far, four ‘positive indigenisation lists’ have barred the import of 411 weapons and systems.

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The trickiest, officials say, is the $950-million contract for delivery of four advanced Talwar class frigates for the Indian Navy that was inked in 2018. The warships are designed to operate with a Ukrainian power plant, with no alternative option available.

India had to pull through a diplomatic coup of sorts in 2019 when it managed to convince Ukraine to supply engines for the first two ships that are being made in Russia, despite the Crimea crisis. These Zorya Mashproekt RPC gas turbine engines have been delivered to the Kaliningrad shipyard and are being integrated on the warships.

Deals under threat
• Project 11356: $950-m deal to supply four frigates to the Indian Navy
• Two being built in Russia. Gas turbine engines are Ukranian
• S-400: Delivery of first regiment has taken place
• Prolonged crisis could impact future deliveries
• JV with Russia: Brahmos-Russian venture recently bagged export order from the Philippines JV for production of AK

Closure of Any Project Unlikely

However, two additional ships are to be made at the Goa Shipyard with Russian assistance and power plants for them are yet to be delivered. There are concerns that uncertainty of supplies from Ukraine could adversely impact the project.

India has also received the first regiment of the S-400 air defence system from Russia but the delivery of four more is still hanging in the balance. There are no indications yet of any delay from the Russian side on the deliveries but a prolonged crisis in Ukraine is being seen as a matter of concern. In addition, US sanctions on India for the purchase under its CAATSA (Countering America’s Adversaries Through Sanctions Act) regime is now a distinct possibility. Till now, India had avoided the sanctions that have been imposed on Turkey and China in the past.

The sanctions will not lead to the closure of any projects as India is determined to go ahead with its Russian partnership but they cause delays in payments and procedural difficulties that take time to resolve. India and Russia have managed to evolve a process of payments for military systems that bypasses all US influenced banking controls. A significant part of these payments are being made through the Rupee-Rouble route.

Other Indian projects that can come under the scanner are the two joint ventures with Russia to manufacture missiles and assault rifles. The Brahmos project is jointly owned by the two nations and has recently won an export order to the Philippines, with more on the horizon. The other joint venture to produce Kalashnikov AK 203 assault rifles in India is yet to fully take off as production has not yet commenced in Amethi, where the factory has to be set up.

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BrahMos Aerospace has been asked to carry out performance security which is similar to the security deposit that means a financial guarantee that the company needs to furnish as the successful tenderer for the due performance of the contract that already has been carried out.

This is a landmark win for India’s Defence Industrial complex in a global competition. The Indian offer is supported by Russia, which has developed the 290-km missile with India and continues to supply key played parts, notably the engine which powers Brahmos to Mach 3, or three times the speed of sound. 

This will be amongst the most significant Indian exports of offensive military equipment to an ASEAN country and marks a big moment in India’s Act East Policy. This marks the success of Indian outreach efforts to countries similarly threatened by Chinese expansionism. 

Negotiated with the Government of India, it includes the delivery of three batteries, training for operators and maintainers as well as the necessary Integrated Logistics Support (ILS) package. Conceptualized as early as 2017, the Office of the President approved its inclusion in the Horizon 2 Priority Projects in 2020,” the Secretary stated.

“The Coastal Defense Regiment of the Philippine Marines will be the primary employer of this modern strategic defense capability of the Armed Forces of the Philippines,” Secretary Lorenzana added. There’s often been tension in the waters around Philippines because of aggressive Chinese naval presence and its territorial claims over the Spratly Islands.

BrahMos Aerospace, an India-Russian joint venture, produces the supersonic cruise missile that can be launched from submarines, ships, aircraft, or from land platforms. BrahMos missile flies at a speed of 2.8 Mach or almost three times the speed of sound.

Brahmos missile regiments are deployed by India close to the borders where it faces threat of external aggression. It is the world’s fastest cruise missile, which with its manoeuvre capability is virtually impossible to intercept. It’s high level of accuracy is also proven.

Protracted Negotiations

The contract is for the shore-based variant of the anti-ship missile system and it will bolster Philippines’ defence capability amid increasing Chinese aggression.

In November, Chinese coast guard ships blocked and used water cannons on two Philippines supply boats heading to a disputed shoal occupied by Filipino marines in the South China Sea. This led to a warning from the Philippines government that its vessels are covered under a mutual defence treaty with the United States.

Negotiations for BrahMos between India and the Philippines had been going on for the last few years, but hit a roadblock in December 2020, with Manila citing budgetary limitations caused by the Covid-19 pandemic. In March 2021, India signed a key enabling pact with the Philippines that had paved the way for government-to-government deals on defence equipment, including BrahMos.

Apart from the Philippines, Vietnam could be the next BrahMos export customer as talks between the two countries have progressed. India has offered BrahMos to countries that have been facing increasing Chinese maritime adventurism in areas of the South China Sea and Indian Ocean Region. Dr. Sudhir Kumar Mishra, former Chief Executive Officer and Managing Director of the BrahMos Aerospace Limited recently while speaking to the media had said that as per NATO’s studies only Two BrahMos hits can sink any big class of warships and smaller warships can be taken down by one BrahMos hit.

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