“Guns for Butter”
The second in a five-part series takes a close look at the military’s push to acquire defense equipment from domestic sources rather than overseas.
By Vikas Gupta
Trade Standard, March 30, 23
37e Report of 17e The Lok Sabha Defense Standing Committee, which was tabled in Parliament on March 31, reveals that despite the government’s encouragement of defense procurement from domestic sources, almost 40% of the defense budget defense investment has been spent on foreign military equipment over the past decade. .
Extrapolating from the report, which examines defense spending from fiscal year 2012-13 (FY13) to FY22, spending by foreign suppliers exceeded 35% in seven of those 10 years. In the remaining three years, outward investment spending exceeded 40%, on one occasion reaching 49%.
The Department of Defense provided the Standing Committee with the following information on the importation of defense equipment: Over the past five fiscal years (fiscal years 2017-18 to 2021-22) and the current fiscal year 2022-23 ( up to December 2022), 264 of the procurement contracts have been signed, of which 88 contracts, worth about 36.26% of the total contract value, have been signed with suppliers from foreign countries, of which Russia, the United States, Israel, France, etc. for the acquisition of defense equipment – helicopters, planes, radars, rockets, guns, assault rifles, missiles and ammunition (sic).
Among the measures the Department of Defense announced to boost domestic procurement is a target to increase domestic procurement by 68% to 75% in fiscal year 2023-24 (FY24).
The Ministry of Defense also announced that private industry will be allocated 25% of the budget for defense research and development (R&D). Additionally, Rs 1231 crore would be allocated for the development of indigenous prototypes under the ‘Make’ category in FY24.
” To ensure Atmanirbhar Bharat, some policy alignments have been achieved. The government has released four positive indigenization lists since 2020 which, like today, represent 411 items ranging from firearms, rifles to submarines and more. which are kept on the import embargo list. This means that these items will no longer be imported in the future. In addition, some 3,738 items have been identified for DPSUs which will be sourced solely from Indian industry,” the MoD said during briefings, according to the Standing Committee report.
The Ministry of Defense has also responded to inquiries from the Standing Committee on Dependence on Foreign Actors, in particular reports from various publications that 84.3% of major conventional weapons purchased by India from during the 2016-20 financial year were of foreign origin, of which licensed production accounted for 57.8 percent.
In response, the Secretary of Defense said, “Yes. We don’t have certain technologies like jet engine technology. We even have to depend (on other countries) for ship power supplies. We are making efforts. Government policies support our efforts. As has been pointed out, we are moving into licensed production.
“This in itself will transfer a huge amount of knowledge into the country, and due to the new government decision in 2021 that imports will be restricted, we will be able to bring several technologies into the country through technology transfer. But we will be short-term dependent on some critical equipment, including power supplies, and we are doing everything we can to overcome that,” the Defense Secretary said.