MoD’s import embargo on 101 defence items only formalises an existing reality - Broadsword by Ajai Shukla - Strategy. Economics. Stuff.

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Monday, 10 August 2020

MoD’s import embargo on 101 defence items only formalises an existing reality

 

By Ajai Shukla

Business Standard, 11th August 20

 

The last fortnight has seen the Ministry of Defence (MoD) release three major documents relating to defence acquisition, manufacture and exports. These include drafts of two new policies for public comment – the Defence Production and Export Promotion Policy 2020 (DPEPP 2020) and the Defence Acquisition Procedure of 2020 (DAP 2020). Finally, on Sunday, the MoD issued a list of 101 defence weapons and equipment that will be progressively embargoed for import between now and 2025.

 

From December onward, the army, navy and air force will not be permitted to import 69 categories of defence equipment. The army will have to rely on Indian suppliers for tracked, self-propelled and towed artillery guns, multi-barrelled rocket launchers of the Pinaka class, sniper rifles and bulletproof jackets and helmets. The navy will have to indigenously build several categories of warships, such as missile destroyers, next-generation missile vessels, anti-submarine craft, offshore patrol vessels and sonar systems and weaponry. The air force will have to build in India its requirement of light combat fighter (LCA) aircraft and helicopters, light transport aircraft, and parachute delivery systems for air-dropping a range of stores and equipment.


Some items on import-embargo list

 

Year of Import Embargo

Name of weapon platform/equipment

 

 

December 2020

Tracked self-propelled howitzer (155 mm, 52 calibre)

 

Towed artillery gun (155 mm, 52 calibre)

 

Multi-barrelled rocket launcher (Pinaka variant)

 

Various kinds of warships

 

Shipborne medium range gun

 

Integrated ship’s bridge system

 

Tejas Mark 1A – enhanced indigenized content

 

Light Combat Helicopters

 

Transport aircraft (light)

 

Military trucks, 4x4, 6x6, 8x8, 10x10, 12x12

 

Fixed wing mini-Unmanned Aerial Vehicles (UAVs)

 

Software defined radio (SDR) for Indian Navy

 

Various kinds of simulators

 

 

December 2021

Wheeled armoured fighting vehicle (AFV)

 

Assault rifle 7.62 x 39mm and Light machine gun (LMG)

 

Various types of mines and ammunition

 

Conventional submarines

 

 

December 2022

155 mm artillery ammunition

 

Electronic warfare (EW) systems

 

 

December 2023

Satellites GSAT-7C and GSAT-7R

 

Basic trainer aircraft (BTA)

 

Astra Mark1 beyond visual range air-to-air missile 

 

 

December 2024

Electronic fuse & bi-modular charge for artillery ammunition

 

Light low-level terrain radar (LLLTR)

 

 

December 2025

Long range land attack cruise missile (LR LACM)

 

A year later, from December 2021 onwards, 11 more equipment categories, including wheeled tanks, light machine guns, assault rifles and ammunition for tanks would have to be sourced from Indian manufacturers. In addition, conventional submarines, such as the six being acquired under Project 75-I, would have to be built in India.

 

From December 2022, import would be banned of medium artillery ammunition, electronic warfare systems and two other categories. From December 2023, eight more equipment types would face import embargoes, including basic trainer aircraft, communications and reconnaissance satellites and Astra air-to-air missiles. Another eight categories – including artillery ammunition fuses and charge – would have to be indigenised from December 2024. Finally, the MoD has banned the import of long-range cruise missiles from December 2025.

 

The MoD states this import embargo is intended to assure Indian defence firms they can “manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by Defence R&D Organisation (DRDO).”

 

In the past, defence industry, especially private firms, have expended money and research effort on developing a defence product, only to see the MoD import it from the global market instead. An import embargo on specific products would provide assurance against such an eventuality.

 

A layer of assurance is already provided in the Defence Procurement Procedure of 2016 (and proposed in DAP-2020), through the stipulation that a product that is “India designed, developed and manufactured” would be prioritised for acquisition over any other category.

 

The MoD states this thrust on import substitution has its roots in “Prime Minister Narendra Modi’s address to the nation on May 12 [wherein he] had given a clarion call for a self-reliant India based on five pillars, i.e. economy, infrastructure, system, demography and demand; and announced a special economic package for Self-Reliant India named Atmanirbhar Bharat.”

 

Since Modi’s election in 2014, he has regarded defence manufacturing as a vehicle for employment generation. Inaugurating Aero India show in February 2015, he stated: “Studies show that even a 20-25 per cent reduction in imports could directly create an additional 100,000-120,000 highly skilled jobs in India. If we could raise the percentage of domestic procurement from 40 per cent to 70 per cent in the next five years, we would double the output in our defence industry.”

 

Five years down the line, that aim is far from being met. However, last week’s draft DPEPP-2020 sets a similar target for India’s aerospace and defence industry to more than double in size “from the current Rs 70,000 crore to Rs 140,000 crore by 2025.”

 

Elsewhere in the draft DPEPP-2020, indigenous defence production is estimated at Rs 80,000 crore. “While the contribution of public sector is estimated to be Rs 63,000 crores, the share of private sector has steadily grown to Rs 17,000 crores over the years,” states the document.

 

While most defence industry executives have welcomed the import embargo list, many point out that it only stipulates what is already the reality – banning the import of equipment that is already being procured, or about to be procured, from indigenous suppliers.

 

They point out that, in the category of tracked, self-propelled guns, the army is already procuring the K9 Vajra system that Larsen & Toubro (L&T) builds under a South Korean licence outside Pune. The DRDO is collaborating with private firms Kalyani Group and Tata Advanced Systems Ltd (TASL) in developing towed artillery guns and Pinaka multi-barrelled rocket launchers. The army’s entire requirement of tanks has long been built at Chennai and its infantry combat vehicles at Medak.

 

Similarly, the embargo on the import of naval warships would change little, since most of its warships are already built in Indian shipyards. The navy’s vice chief, Vice Admiral G Ashok Kumar, says that, of 48 warships under construction, 46 are being built in India; only two frigates are being constructed in Russia. The MoD’s Sunday announcement that six conventional submarines would be built in India for Rs 45,000 crore only repeated what had been decided as far back as 1999 under the navy’s 30-year Submarine Building Plan. 

 

 The air force, meanwhile, has for decades been building its fighter and trainer aircraft in India, with the recent exception of the Rafale. Placing import embargoes on the Tejas Mark 1A and the Light Combat Helicopter are superfluous, since these are indigenously designed and manufactured aircraft, as is the HTT-40 basic trainer aircraft. 

 

The MoD clarified this issue on Monday: “Such systems are also available in the international market [so they] have been included in the negative list of imports to ensure that the defence services do not go in for procurement of similar systems ex-import.”

 

The ministry has also highlighted that a product would be considered indigenous only if there is a “minimum laid down” indigenous content – presumably 50 per cent, going by DPP-2016. Placing that equipment category on the import embargo list would force indigenous manufacturers “to ensure indigenisation and decrease import content to the permissible limits.”




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