Modi points to green shoots, claims “humble beginning” in building defence industry - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 12 April 2018

Modi points to green shoots, claims “humble beginning” in building defence industry

Modi also attended demonstration by the seashore of army, navy and air force indigenous equipment

By Ajai Shukla
Business Standard, 13th Apr 18

Three years ago in Bengaluru, on February 18, 2015, while inaugurating Aero India 2015 — the first defence exhibition of the Bharatiya Janata Party (BJP)-led government — Prime Minister Narendra Modi had outlined an ambitious “Make in India” agenda for defence production. “We have the reputation as the largest importer of defence equipment in the world. That may be music to the ears of (foreign defence vendors) here. But, this is one area where we would not like to be Number One!” he quipped.

Three years later, inaugurating Defexpo 2018 in Chennai on Thursday, a more sombre Modi would have been conscious that little has changed. India remains the world’s top arms importer. The “additional 100,000 to 120,000 highly skilled jobs in India” he visualised in Bengaluru, which he planned to create by “raising the percentage of domestic procurement from 40 per cent to 70 per cent in the next five years”, remains an aspiration.

So Modi focused on the policy positives in a determinedly upbeat speech at Chennai. In what he characterised as “a humble beginning”, he cited progress “on defence manufacturing licences, on defence offsets, on defence exports clearances, on foreign direct investment in defence manufacturing, and on reforming our defence procurement.”

He said “The defence procurement procedure has been revised with many specific provisions for stimulating growth of domestic defence industry.” In truth, defence industry growth has been anaemic. 

A key reason for this lacklustre industrial growth has been conservative, single-digit annual growth in the defence budget. Modi showed some recognition of this when he stated: “We are conscious that defence manufacturing is unique in terms of government involvement. You need the government to grant a license to manufacture arms and ammunition. Since the government is almost the only buyer, you need the government to grant an order. You need the government even to grant permission to export.”

Without domestic off-take, defence industry would have to rely on exports for growth. Here Modi cited figures to claim better performance than the United Progressive Alliance (UPA) government. “In May 2014, the total number of defence export permissions granted stood at 118, for a total value of 577 million dollars. In less than four years, we have issued 794 more export permissions, for a total value of over 1.3 billion dollars”, he stated.

How much of this sanctioned figure has actually been exported is not known.
However, Modi pulled no punches in criticising the UPA government’s defence preparedness. “There was a time when the critical issue of defence preparedness was hampered by policy paralysis. We have seen the damage such laziness, incompetence or perhaps some hidden motives, can cause to the nation. Not now, Not anymore, Never again”, he declared.

The PM pointedly charged the previous government with apathy towards the jawan, contrasting the BJP’s actions with its predecessors. “You would have seen how the issue of providing bullet proof jackets (BPJs) to Indian soldiers was kept hanging for years. You would have also seen that we have brought the process to a successful conclusion with a contract that will provide a boost to defence manufacturing in India.”

The government recently signed a contract for over 186,000 BPJs, out of the approximately 386,000 jackets that the army alone requires. Earlier, a fast track contract for 50,000 jackets had been concluded by the government.

Modi also claimed credit for having “taken bold action to meet our immediate critical requirements (for fighter aircraft), but have also initiated a new process to procure 110 fighter aircraft.”

While earlier tenders, like the 2007 one for medium multirole combat aircraft dragged on without yielding a result, Modi indicated that this one would have a speedy conclusion.

The PM also claimed credit for providing impetus to defence start ups across the country. “We have launched the 'Innovation for Defence Excellence' scheme. It will set up defence innovation hubs throughout the country to provide necessary incubation and infrastructure support to the start-ups in defence sector”, he said.

Before leaving Chennai, Modi also witnessed an operational demonstration staged by the sea shore in which naval warships, air force fighters and helicopters and army tanks and helicopter-borne commandos displayed their capabilities.



  1. I agree. The helmets and BPJ were pending for so long. Even in MMRCA the Rafale deal cut the indecisive MoD . There is allot of criticism of Rafale deal I think all rational thinking people have welcomed it. The 100 odd orders on LCA is also welcome so,is a commitment to buy 200+ LCA mk2.

    Time HAL delivered LUH, IJT , HTT LCH quickly.
    Same with OFB they improved their quality.
    The govt is not even 4 years old, commendable speed considering the cobweb ridden MoD .

  2. Our Prime Minister Mr Modi should have made known at the Defence Expo that
    the security of our country is more dependent on other factors, then our Armed Forces.
    If the spotlight had not fallen on the poor girl from Jummu, it would have been ‘plan accomplished’ by the communal forces in the area with Hindu votes polarised.
    The schisms between the majority community and the minority being created, is fraught with danger.
    The other danger to our security will be constant civil disturbance as the demographic bulge brings millions of the unskilled into employment age. The governments writ will not run in parts of India where the rule of law will collapse.
    India has not taken advantage by creating in our country, a place of cheap manufacturer for the world and followed China (now with an ageing population) into rapid industrialisation.
    We have failed to adequately educate our young population, and betrayed Indias future.
    Our best defence policy now would be to ensure war never happens for the next three decades, best done by India joining the belt and road and becoming allied to our pragmatic neighbour China.

  3. I am glad that the PM finally understood what defence procurement and MoD is all about. In 2015 he was new and over ambitious and now the real situation has sunk in. but to their credit they have tried a few things like DPP, FDI, licensing and DPROP but it all boils down to contracts you give.
    look at the BPJ, now the private player will expand capacity and employ more people and that is what we need for large project like FICV, BMS, TCS and MMRCA. until then all big players will only wait and watch. on the other hand we have bad examples like L&T who are waiting for years now for order to stay afloat.


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