STRATEGIC PARTNERSHIP MODEL THE ROUTE TO ATMANIRBHARTA IN DEFENCE

MUKESH BHARGAVA argues why India needs to invest in building long-term indigenous capabilities in the private industry through a special partnership model to achieve the goal of self-reliance through ‘Make in India’

- MUKESH BHARGAVA

India has the third largest armed forces in the world with a defence budget of $70 billion (Rs 5.25 L crore) growing at a CAGR of about 12 percent till 2019-20. About 60 percent of defence equipment were procured directly or indirectly through imports including key platforms. The majority of production was through 17 DPSUs having a production of $8.5 billion with a strength of 200,000 people. Many private companies including MSME and start-ups have been involved in manufacture of components, subsystems and systems driving indigenous design and innovation efforts with a handful private companies which have evolved into system integrators for complete platforms and systems. In addition, with the higher FDI limit of 74 percent under automatic route approved, FOEMs have formed 44 defence JVs to exploit the Make-in-India (MII) and Atmanirbharta (AN) policy of MoD/GoI.

Historically, R&D in defence has been the preserve of DRDO which have contributed significantly in developing domestic capabilities through development partner model in private sector. The MoD is committed to spend $250 billion in the next 7-8 years which coupled with $10 billion worth of defence offsets. This would ensure substantial job creation.