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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On August 9, Defence Minister Rajnath Singh had announced that India will stop the import of 101 weapons and military platforms like transport aircraft, light combat helicopters, conventional submarines, cruise missiles and sonar systems by 2024.

The first list of 101 items banned from import included towed artillery guns, short-range surface to air missiles, cruise missiles, offshore patrol vessels, electronic warfare systems, next-generation missile vessels, floating dock, anti-submarine rocket launchers and short-range maritime reconnaissance aircraft.

Subsequently, the defence ministry released the first list of items, with a detailed timeline. “We are working on bringing out the second negative arms import list by end of December,” said a senior official.

The defence minister has already outlined the broad contours of the government’s roadmap for making India a hub for defence manufacturing.

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India is one of the largest importers of arms globally. According to estimates, the Indian armed forces are projected to spend around USD 130 billion in capital procurement in the next five years.

Targets Set

The defence ministry has set a goal of a turnover of USD 25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years that included an export target of USD 5 billion (Rs 35,000 crore) worth of military hardware. As part of efforts to promote the domestic defence industry, the ministry has bifurcated the capital procurement budget for 2020-21 between domestic and foreign capital procurement routes.

A separate budget head has been created with an outlay of nearly Rs 52,000 crore for domestic capital procurement in the current financial year. In sync with the government’s initiative, the DRDO on Monday identified 108 military systems and subsystems like navigation radars, tank transporters and missile canisters for the domestic industry to design, develop and manufacture.

The DRDO said it will also provide support to industries for design, development and testing of these systems on a requirement basis. The premier institute has set a target of next year in developing the 108 systems and subsystems.

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