India has the reputation as the largest importer of defence equipment in the world. That may be music to the ears of some of people but this is one area where we would not like to be Number One! Our security challenges are well known. Our international responsibilities are evident. We do need to increase our defence preparedness. We do have to modernize our defence forces.We have to equip ourselves for the needs of the future, where technology will play a major role. As a nation of one billion people, we also have huge requirements for managing internal security. A nation with a strong defence industry will not only be more secure but it will also reap rich economic benefits. It can boost investment, expand manufacturing, support enterprises, raise the technology level and increase economic growth in the country.
In India, the defence industry in the government sector alone employs nearly 200,000 workers and thousands of Engineers and Scientists. They produce an output of nearly 7 billion dollars annually. It also supports a very large pool of small and medium enterprises. Our defence industry in private sector is still small. But, it already employs thousands of people. This is despite the fact that nearly 60% of our defence equipment continues to be imported. There are studies that show that even a 20 to 25% reduction in imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India. If we could raise the percentage of domestic procurement from 40% to 70% in the next five years, we would double the output in our defence industry. Imagine the impact in terms of jobs created directly and in the related manufacturing and services sector! Think of the spin off benefits on other sectors in terms of advanced materials and technologies! That is why we are focusing on developing India’s defence industry with a sense of mission. This is why it is at the heart of our Make in India programme. We are expanding the role of private sector. Our goal is to provide a level playing field for all. We speak in terms of national capacity, not public sector or private sector.
Government’s support for research and development is essential for defence sector and it should also be accompanied by a degree of assurance on purchase. Government has introduced a scheme to provide up to 80% of funding from the Government for development of a prototype in India. And, we are also launching a Technology Development Fund. For too long, our research and development has been confined to government laboratories. We must involve our scientists, soldiers, academia, industry and independent experts more closely in research and development. We must pay attention to developing supply chains, with emphasis on innovation. It is a market where buyers are mainly governments, the capital investments are large and the risks are high. Defence budgets around the world are becoming tighter. India’s frugal but sophisticated manufacturing and engineering services sectors can help reduce costs. India can also be a base for export to third countries, especially because of India’s growing defence partnerships in Asia and beyond. A strong Indian defence industry will not only make India more secure, it will also make India more prosperous.
[Report by prepared by Siddharth Singh based on PM’s Speech at AERO INDIA SHOW 2015]