Positive Indigenisation Lists

Fifth Positive Indigenisation List (PIL) of Department of Military Affairs (DMA) comprising 98 items was released by Raksha Mantri Shri Rajnath Singh during the plenary session of ‘Swavlamban 2.0’. The list includes Highly complex systems, sensors, weapons and ammunition have been included in the list. All these items will be procured from indigenous sources as per provisions given in Atmanirbharta in Defence Acquisition Procedure 2020 in staggered timeline. The DMA had earlier promulgated four PILs comprising 411 military items. Separately, the Department of Defence Production (DDP) has notified four PILs consisting of a total of 4,666 items, including Line Replacement Units/Sub-systems/Spares & Components for DPSUs. The fourth PIL of 928 items was released by DDP in 2023.

Record Defence Production

The value of defence production in Financial Year (FY) 2022-23 crossed the figure of Rs one lakh crore for the first time ever. It was Rs 95,000 crore in FY 2021-22. The Government is continuously working with defence industries and their associations to remove the challenges faced by them and promote defence production in the country. A number of policy reforms have been taken to achieve the objective of ease of doing business, including the integration of MSMEs and start-ups into the supply chain. Due to these policies, the industries, including MSMEs and start-ups, are forthcoming in defence design, development & manufacturing and there is almost a 200% increase in the number of defence licenses issued to the industries in the last 7-8 years by the Government.

Record Defence Exports

Through consistent policy initiatives of the Government and tremendous contribution of the defence industry, defence exports reached an all-time high of approx. Rs 16,000 crore in FY 2022-23, almost Rs 3,000 crore more than the previous financial year. It a rise of over 10 times since 2016-17. India is now exporting to over 85 countries. Indian industry has shown its capability of design and development to the world, with 100 firms exporting defence products at present. Major platforms being exported include Dornier-228, 155 mm Advanced Towed Artillery Guns, Brahmos Missiles, Akash Missile System, Radars, Simulators, Mine Protected Vehicles, Armoured Vehicles, PINAKA Rockets & Launchers, Ammunitions, Thermal Imagers, Body Armours, besides Systems, Line Replaceable Units and Parts & components of Avionics and Small Arms. There is growing global demand of LCA-Tejas, Light Combat Helicopters, Aircraft Carrier, MRO activities etc.

Separate Budget for Domestic Industry

Record 75 per cent (approx. Rs one lakh crore) of the defence capital procurement budget was earmarked for domestic industry in FY 2023-24, up from 68 per cent in 2022-23. This was announced by the Raksha Mantri during 14th Aero India in Bengaluru. In FY 2023-24, Ministry of Defence was allocated a total Budget of Rs 5.94 lakh crore, which is 13.18 per cent of the total budget (Rs 45.03 lakh crore). Capital outlay pertaining to modernisation and infrastructure development was increased to Rs 1.63 lakh crore.

HAL Helicopter Factory

Hindustan Aeronautics Limited (HAL) Helicopter Factory was dedicated to the nation by Prime Minister Shri Narendra Modi at Tumakuru in Karnataka. The factory is India’s largest helicopter manufacturing facility and will initially produce Light Utility Helicopters (LUHs). The LUH is an indigenously designed and developed three-ton class, single engine multipurpose utility helicopter with unique features of high manoeuvrability. Initially, the factory will produce around 30 helicopters per year and can be enhanced to 60 and then 90 per year in a phased manner.

ALSO READ:Safran and HAL to form joint venture company for helicopter engines

LCA Tejas

HAL handed over the first twin-seater Light Combat Aircraft ‘Tejas’ to the IAF in the presence of Rakha Rajya Mantri Shri Ajay Bhatt in Bengaluru. It is a light weight, all weather multi-role 4.5 generation aircraft, designed to support the training requirements of the IAF and augment itself to the role of a fighter in case of necessity. It is an amalgamation of contemporary concepts and technologies such as relaxed static-stability, quadraplex fly-by-wire flight control, carefree manoeuvring, advanced glass cockpit, integrated digital avionics systems and advanced composite materials for the airframe. The IAF placed an order for 83 LCAs with HAL.

C-295 Transport Aircraft

First C-295 MW transport aircraft was formally inducted into the Indian Air Force in the presence of Raksha Mantri Shri Rajnath Singh. The aircraft are being inducted through a collaboration between Tata Advanced Systems Limited and Airbus Defence and Space S.A., Spain. Fifteen more aircraft will be delivered in flyaway condition and they are scheduled to be received till August 2025. Remaining forty will be manufactured at the C-295 transport aircraft manufacturing facility, the foundation stone of which was laid by the Prime Minister in Vadodara, Gujarat in October 2022. The first Made in India aircraft is expected from September 2026. This medium lift tactical aircraft, which is capable of taking off and landing from unprepared landing grounds, will replace the HS-748 Avro aircraft.

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The powers, which were first granted to defence forces post-Uri surgical strikes in 2016 during heightened tensions with Pakistan, have been helpful in tackling the military standoff with China going on since May 2020.

The case for granting emergency acquisition powers to defence forces is expected to come up for discussion in a high-level defence ministry meeting planned in end-Aug 2022.

The emergency powers allow forces to acquire any new or in-service equipment on a fast-track basis to improve preparedness for conflict situations.

In the previous approvals, the defence forces had the power to sign deals for equipment worth Rs 300 crore and the products had to be delivered within three months to one year, the sources said.

The armed forces have to spend funds on the new acquisitions from their own budgetary allocation and they don’t have to take the defence ministry’s approval for these deals, the sources said.

The defence forces have strengthened their preparedness through these acquisitions as the Indian Air Force and the Army received ‘Heron’ unmanned aerial vehicles which have now been deployed for surveillance in Ladakh as well as in the northeast for keeping an eye on Chinese activities.

The forces have also got missiles which can hit ground targets from long ranges. The Rafale fighter jets have also received a boost with the induction of the HAMMER missiles which can hit hardened ground targets like bunkers from a long distance.

The Army and the IAF also used these powers to strengthen their small arms as the Sig Sauer assault rifles have been inducted into all three forces now.

Indian armed forces extensively utilised the emergency procurement powers granted to them in different phases by the government to equip themselves with the necessary weaponry to handle any conflict or aggression by enemies on both sides.

The armed forces have a long list of equipment to buy and will use the powers to buy both indigenous as well as foreign manufactured products.

The powers are being granted to the defence forces again by the government at a time when China is showing aggressive manoeuvres on the Taiwan front and holding multiple missile firings and indulging in display of strength in the region.

On the other hand, Pakistani agencies are also trying to carry out operations along the maritime border with India near the Gujarat coast.

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“In continuous pursuit of achieving self-reliance in defence manufacturing under ‘Aatmanirbhar Bharat Abhiyan’ and in sync with the announcement made in the Union Budget 2022-23 that allocated 25 per cent of the defence R&D budget for industry-led R&D, 18 major platforms have been identified and announced by the MoD for industry led D&D,” stated the MoD in a written response to a Parliamentary question.

Under Make-1 procedure of the Defence Acquisition Procedure of 2021, 14 items are listed as follows:

•             Hypersonic glide vehicles

•             Anti-jamming systems for varied platforms

•             Directed Energy Weapons (>300 KW)

•             Light-weight tank

•             Self-healing minefields

•             Unmanned autonomous AI-based land robot

•             127 mm naval gun

•             127 mm guided projectile

•             Autonomous AI-based land robot

•             Standoff air-borne jammer

•             Lithium-ion/ Lithium-sulphur cells

•             Communication systems: AFNET switches, routers, encryptors & VOIP phones

•             Electro-optical pod with high-res sensing

•             Plug and Play’ housing/ infrastructure for soldiers posted at extreme altitudes

Under Make-2 procedure, only Anti-jamming systems for varied platforms is listed.

Under Special Purpose Vehicle, Long-range unmanned aerial vehicles (UAVs) and Indian multi-role helicopter (IMRH) are listed.

Under iDEX scheme, single item – Low-orbit pseudo-satellites – is listed.

Starting from August 2020, the MoD has issued three lists of defence equipment, the import of which is embargoed. The August 2020 list incrementally bans the import of 101 items, with the embargo growing wider each year.

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According to South Block officials, this collaboration will be tested in the development and manufacture of Indian Multi-Role Helicopter (IMRH), which will ultimately replace all Russian built Mi-17 and Mi-8 helicopters in the Indian military’s present inventory. The IMRH will have a 13 tons take-off weight and will perform with the Indian armed forces in air assault, air attack, anti-submarine, anti-ship, military transport and VVIP roles.

It is understood that Indian private sector companies have already shown their eagerness to participate in the project with the Defence Ministry telling them to start manufacturing in the next seven years. The French Safran has already signed an MoU with Indian HAL on July 8, 2022, to form a new joint venture company to develop, produce and support the IMRH engine including the naval variant.

According to officials, the private sector companies will also be allowed to export 25 per cent of their production to third countries and generate foreign exchange for the country. The Indian Armed Forces has been told to purchase the developed IMRH which is stipulated to roll out in next seven years. The private sector companies have also sought an assurance from the Defence Ministry that the Indian armed forces should purchase the helicopter if the product is manufactured in the next five years by advancing timelines and saving money and man-hours.

The decision to allow the private sector to acquire 51 per cent stake and form a joint venture with Indian PSUs was taken as the latter were not being able to deliver in required time leading to cost overruns. This delay was leaving the Modi government with no options but to purchase the much-required machines via the tender or government-to-government route from other countries.

While the IMRH is expected to roll out in the coming five to seven years, the Indian Navy is expected to get its first anti-submarine warfare Sirkorsky MH 60R Seahawk helicopters delivered in India by the end of this year. Although the first two to three helicopters have already been handed over to the Indian Navy for training purposes by San Diego Naval Station in the US, the remaining deliveries of 21 helicopters will begin soon as per the USD 2.3 billion February 2020 deal signed by both the governments.

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The amendments will allow the Indian private sector to acquire a major stake in Defence R&D companies, which will be set up for development of major hardware platforms like drones, helicopters, aircrafts, and advanced submarines. This is a groundbreaking development as till now, only government DPSUs and laboratories were allowed defence R&D with only minor items being exposed to private R&D. This is in line with the defence budget, where it was announced that 25 per cent of defence R & D budget would be spent on these platform specific SPVs with the private sector.

Given the global turmoil sparked off by the Ukraine war and the Chinese belligerence in the Indo-Pacific, India has no options but to make defence R & D competitive as the public sector alone cannot cater to growing Indian defence platform requirements in the stipulated time.

While DRDO has been developing hardware platforms over the decades, the entry of private sector into defence R&D will give India more options for developing stand-off weapon systems like long endurance armed drones, anti-drone systems, 12-ton multi-purpose helicopters, next generation of fighter aircraft and perhaps nuclear powered and conventionally armed submarines.

The matter has acquired urgency as China has been able to develop armed high altitude long endurance drones like Wing Loong 10, which is powered by turbofan engines like state-of-the-art US armed drones. India, on the other hand, is still relying on getting its medium altitude long endurance drones being upgraded by Israel and has no answer to the long strides that China or for that matter Iran and Turkey have taken in development of unmanned aircraft systems.

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According to officials aware of the developments, the amendments will allow the Indian private sector to acquire a major stake in Defence R&D companies, which will be set up for development of major hardware platforms like drones, helicopters, aircrafts, and advanced submarines. This is a groundbreaking development as till now, only government DPSUs and laboratories were allowed defence R&D with only minor items being exposed to private R&D. This is in line with the defence budget, where it was announced that 25 per cent of defence R & D budget would be spent on these platform specific SPVs with the private sector.

Given the global turmoil sparked off by the Ukraine war and the Chinese belligerence in the Indo-Pacific, India has no options but to make defence R & D competitive as the public sector alone cannot cater to growing Indian defence platform requirements in the stipulated time. The global defence market is set to face new challenges as countries like Japan, Germany, Asean, South Korea, and east European countries will be seeking more weapons from the US to deter Russia and China, and the latter will be cutting down on exports to service their own requirements. India has no options but to develop and manufacture hardware platforms on its own as its major supplier Russia is focused on the Ukraine war and it is only a matter of time when scarcity of spare parts hits the Indian armed forces.

While the Defence Research and Development Organization (DRDO) has been developing hardware platforms over the decades, the entry of private sector into defence R&D will give India more options for developing stand-off weapon systems like long endurance armed drones, anti-drone systems, 12-ton multi-purpose helicopters, next generation of fighter aircraft and perhaps nuclear powered and conventionally armed submarines.

The matter has acquired urgency as China has been able to develop armed high altitude long endurance drones like Wing Loong 10, which is powered by turbofan engines like state-of-the-art US armed drones. India, on the other hand, is still relying on getting its medium altitude long endurance drones being upgraded by Israel and has no answer to the long strides that China or for that matter Iran and Turkey have taken in development of unmanned aircraft systems.

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“In continuous pursuit of achieving self-reliance in defence manufacturing under ‘Aatmanirbhar Bharat Abhiyan’ and in sync with the announcement made in the Union Budget 2022-23 that allocated 25 per cent of the defence R&D budget for industry-led R&D, 18 major platforms have been identified and announced by the MoD for industry led D&D,” stated the MoD in a written response to a Parliamentary question.

Under Make-1 procedure of the Defence Acquisition Procedure of 2021, 14 items are listed as follows:

• Hypersonic glide vehicles
• Anti-jamming systems for varied platforms
• Directed Energy Weapons (>300 KW)
• Light-weight tank
• Self-healing minefields
• Unmanned autonomous AI-based land robot
• 127 mm naval gun
• 127 mm guided projectile
• Autonomous AI-based land robot
• Standoff air-borne jammer
• Lithium-ion/ Lithium-sulphur cells
• Communication systems: AFNET switches, routers, encryptors & VOIP phones
• Electro-optical pod with high-res sensing
• ‘Plug and Play’ housing/ infrastructure for soldiers posted at extreme altitudes

Under Make-2 procedure, only Anti-jamming systems for varied platforms is listed.

Under Special Purpose Vehicle, Long-range unmanned aerial vehicles (UAVs) and Indian multi-role helicopter (IMRH) are listed.

Under iDEX scheme,  single item – Low-orbit pseudo-satellites – is listed.

Defence industry watchers point out that, starting from August 2020, the MoD has issued three lists of defence equipment, the import of which is embargoed. The August 2020 list incrementally bans the import of 101 items, with the embargo growing wider each year.

In June 2021, an additional list of 108 defence items was issued by the MoD, progressively banning their import. Invoking“Atmanirbhar Bharat” repeatedly, the second list – termed “Positive Indigenisation List” – took up to 209, the number of defence items that must be compulsorily procured from Indian companies, the number rising each year out to 2025.

On New Year’s Day, 2021, 69 items from the first list were embargoed for import. On January 01, 2022, another 60 items came under the ban. Another 25 will be embargoed for import at the end of 2022; 25 more at the end of 2023; another 21 at the end of 2024 and nine on the New Year of 2026.

It is unclear how this latest import embargo list dovetails with the previous two lists.

The defence industry is sceptical about whether these lists create any pressure to indigenise. The army is already procuring the K9 Vajra system that Larsen & Toubro (L&T) builds under a South Korean licence outside Pune, so banning the import of tracked guns is superfluous.

Meanwhile, the DRDO, along with private firms Kalyani Group and Tata Aerospace and Defence, is already developing towed artillery guns and Pinaka multi-barrelled rocket launchers. Similarly, the army’s entire requirement of tanks has long been built at Chennai and its infantry combat vehicles at Medak. Banning the import of platforms that are already being built in India serves little purpose.

Similarly, there is little purpose in embargoing the import of naval warships, when most of them are already being built in Indian shipyards. According to official navy figures, of 48 warships under construction, 46 are being built in India; only two frigates are being constructed in Russia.

Similarly, Hindustan Aeronautics Ltd (HAL) is already building the majority of the air force’s fighter and trainer aircraft in India, with the recent exception of the Rafale. Banning the import of aircraft such as the Tejas Mark 1A and the Light Combat Helicopter serve little purpose, since these are indigenously designed and manufactured aircraft, as is the HTT-40 basic trainer aircraft.

“These 18 platforms (announced on 22 July) have been distributed between four indigenous routes prescribed in the Defence Acquisition Procedure-2020, namely, Make-I, Make-II, Special Purpose Vehicle (SPV) and Innovations for Defence Excellence (iDEX),” said the MoD.

“These 18 platforms have been identified after extensive consultations between the services, DRDO and the defence industry,” said the MoD.

According to the Minister of State for Defence, “These major platforms… have been identified taking into consideration multiple factors like the capabilities of Indian industry, being cost effective, faster and scalable; current technological advancements; requirement of future warfare; operational challenges; need for import substitution etc.

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According to South Block officials, this collaboration will be tested in the development and manufacture of Indian Multi-Role Helicopter (IMRH), which will ultimately replace all Russian built Mi-17 and Mi-8 helicopters in the Indian military’s present inventory. The IMRH will have a 13 tons take-off weight and will perform with the Indian armed forces in air assault, air attack, anti-submarine, anti-ship, military transport and VVIP roles.

It is understood that Indian private sector companies have already shown their eagerness to participate in the project with the Defence Ministry telling them to start manufacturing in the next seven years. The French Safran has already signed an MoU with Indian HAL on July 8, 2022, to form a new joint venture company to develop, produce and support the IMRH engine including the naval variant.

According to officials, the private sector companies will also be allowed to export 25 per cent of their production to third countries and generate foreign exchange for the country. The Indian Armed Forces has been told to purchase the developed IMRH which is stipulated to roll out in next seven years. The private sector companies have also sought an assurance from the Defence Ministry that the Indian armed forces should purchase the helicopter if the product is manufactured in the next five years by advancing timelines and saving money and man-hours.

The decision to allow the private sector to acquire 51 per cent stake and form a joint venture with Indian PSUs was taken as the latter were not being able to deliver in required time leading to cost overruns. This delay was leaving the Modi government with no options but to purchase the much-required machines via the tender or government-to-government route from other countries.

While the IMRH is expected to roll out in the coming five to seven years, the Indian Navy is expected to get its first anti-submarine warfare Sirkorsky MH 60R Seahawk helicopters delivered in India by the end of this year. Although the first two to three helicopters have already been handed over to the Indian Navy for training purposes by San Diego Naval Station in the US, the remaining deliveries of 21 helicopters will begin soon as per the USD 2.3 billion February 2020 deal signed by both the governments.

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He exuded confidence that the Defence PSUs would play a major role in achieving this goal with a contribution of 70-80 per cent.

The minister exhorted the Non-Official Directors (NODs) of DPSUs to ensure smooth implementation of various initiatives taken by the government towards achieving ‘Aatmanirbharta in Defence’.

He was addressing the CMDs and NODs of DPSUs during the first-of-its-kind workshop organised by the Department of Defence Production in New Delhi.

Rajnath asserted that the country was witnessing a transitional phase towards self-reliance and active and collective efforts were central to realise Prime Minister Narendra Modi’s vision of ‘Aatmanirbhar Bharat’.

He listed various initiatives taken by the MoD to achieve self-reliance, including simplification of the acquisition process of defence equipment/platforms under the Defence Acquisition Procedure 2020; flexibility in Offset guidelines; increase in FDI limit to 74 per cent under Automatic Route and up to 100 per cent under the government route; simplification of the process of obtaining a license; launch of Innovations for Defence Excellence (iDEX) initiative and enhanced use of Artificial Intelligence in the defence sector.

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As the Russia-Ukraine conflict renewed focus on India’s dependence on the former Soviet Union nation for weapons and ammunition, the government has moved to further promote its “Make in India” programme in the defence sector by lessening imports from foreign companies. It amended the Defence Acquisition Procedure (DAP) 2020 to make it mandatory to meet all modernisation requirements of the Indian Army, Navy and Air Force as well as the Indian Coast Guard with indigenously manufactured equipment “irrespective of the nature of procurement”.

“Import of defence equipment and sourcing from foreign industry of capital acquisitions should only be an exception and undertaken with specific approval of Defence Acquisition Council (DAC) or the Defence Minister,” according to a press release issued by the government in New Delhi. Defence Minister Rajnath Singh, himself, heads the DAC.

The Ministry of Defence (MoD) had earmarked 64 per cent of its Capital Acquisition Budget for domestic industry in the financial year (FY) 2021-22. It, however, surpassed the target and utilised 65.50 per cent of Capital Acquisition Budget for procurement of defence equipment indigenously manufactured in India.

The DAC also approved other amendments in the DAP 2020, including the one to dispense with the requirement of the Integrity Pact Bank Guarantee (IPBG) for domestic defence companies participating in a government procurement process. According to the amended procedure, the Earnest Money Deposit (EMD) would be taken as a bid security for all acquisition cases with Acceptance of Necessity (AoN) cost more than Rs 100 crore. The EMD will be valid for the selected vendor up to signing of contracts and returned to remaining vendors post declaration of selection.

“Post contract, Integrity Pact will be covered through the Performance Cum Warranty Bank Guarantee (PWBG). Further, as per extant Government of India policy, EMD is not required from Micro and Small Enterprises (MSEs),” stated the MoD, after acting on an advice from the Ministry of Finance to reduce the financial burden on the country’s defence industry.

The DAC also approved amendments in the DAP 2020 to encourage wider participation and broad base indigenous defence manufacturing sector in the country. The total order quantities in acquisition cases would be split between short-listed vendors, wherever viable. Further, the other technically qualified bidders, who would not be awarded the contract, would be issued a certificate by the defence services, indicating that the product had already been successfully trial evaluated, to facilitate vendors to explore other markets.

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