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Why in the news?

Recently a report released by the Stockholm International Peace Research Institute (SIPRI) highlighted that India’s arms imports fell 33% between 2011-15 and 2016-20.

India’s arms imports-exports:

• India’s top three arms suppliers during 2016-20 were Russia (49%), France (18%) and Israel (13%).
• India was the biggest importer of Russian military hardware during the last five years, accounting for 23% of Russia’s total exports.In 2019 alone, India placed defense orders worth $14.5 billion from Russia.
• India accounted for 0.2% of the share of global arms exports during 2016-20, making the country the world’s 24th largest exporter of major arms.
• Myanmar, Sri Lanka and Mauritius were the top recipients of Indian military hardware.
• The five largest arms exporters in 2016-20 were the US, Russia, France, Germany and China, while the top importers were Saudi Arabia, India, Egypt, Australia and China.
• According to the report, India uses fighter aircraft of France and Russia, guided bombs from Israel, and Sweden’s artillery.

Reasons:

There are following factors that seems to appear in reducing India’s arms imports:

1. Priority to indigenised defence products: The first is the ‘Make in India’ initiative, as part of which a number of components from Indian private and public sector enterprises have been prioritised by the government. For eg: According to government of India data for the financial year 2018-19, the three armed services for their combined capital and revenue expenditures sourced 54% of their defence equipment from Indian industry which in turn helped decrease imports and augment exports.
2. Extraneous reasons: The second set of factors is extraneous to India in the form of delays in supplying equipment by vendors and the outright cancellation of contracts by the Indian government or at least a diminution of existing contracts.
3. Imports embargo: India’s Defence Ministry had recently announced that it will cease imports of over 101 items for the Indian armed forces worth $47 billion
4. Complex Procurement Process: The drop in Indian arms imports have been mainly due to its complex procurement processes.
5. Growing defence manufacturing base: Among arms producers, India has four companies among the top 100 biggest arms producers of the world. These are:
   • Hindustan Aeronautics Limited (HAL)
   • Indian ordnance factories
   • Bharat Electronics Limited (BEL)
   • Bharat Dynamics Limited (BDL)
   • It is estimated, according to SIPRI, their combined sales were $7.9 billion in 2019, representing a 6.1% jump from 2016.
   • Indian public and private companies are capable of manufacturing equipment including helicopters and combat aircraft.
   • South Korea’s K9 Thunder self-propelled howitzers and the U.S. M777 towed artillery piece will be made by Indian private companies Larsen & Toubro and Mahindra group, respectively.
6. Booming entrepreneurship: It is another major reason as India is only third after the US and China in terms of entrepreneurship in India. There have been many start-ups working in the defence manufacturing sector.

Advantages of lesser imports:

• Reduced Import Bill: India is the second largest arms importer in the world after Saudi Arabia. Higher import dependency leads to increase in the Current Account Deficit (CAD).
  • Despite having the fifth largest defence budget in the world, India procures 60% of its weapon systems from foreign markets. Reduced imports would save a considerable amount of financial resources which can otherwise be used in the development process.
• Security interests: Lesser defence imports is critical to national security also. It often forces government and defence organisations to expedite the indigenisation of defence manufacturing.
  • Also, India being surrounded by porous borders and hostile neighbours needs to be self sufficient and self reliant in defence production.
• Employment generation: defence manufacturing will lead to the generation of satellites industries that in turn will pave the way for generation of employment opportunities.
  • As per government estimates, a reduction in 20-25% in defence related imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India.
• Strategic Capability: Self sufficient and self reliant defence industry will place India among the top global powers.
• Nationalism and Patriotism can increase with indigenous production of defence equipment, that in turn will not only boost the trust and confidence of the Indian forces but will also strengthen a sense of integrity and sovereignty in them.

Can we really afford the declining trend of arms imports?

The declining trend of arms import may look good for optimists. However, when connected with ground realities, it may be cautious from a national security perspective. The reasons are:

• Arms and ammunition unavailability: The lack of availability of arms and ammunition to security forces may impact their efficacy in a negative manner thus compromising national security.
  • On several occasions, the CAG has highlighted the continued shortage of ammunition in Indian defence forces.
• Imports of bigger machines: India is already buying heavy defence weaponry such as warplanes, surveillance radars, artillery guns, etc. Curbing imports of smaller tools may cause issues of low maintenance and lack of suitability.
• Strategic fall out: The curbing imports may have its unintended strategic impacts. For eg: Russia has been neutral in India-China rivalry mainly due to India’s huge arms imports from Russia.
  • As India-Russia does not have a very well diversified trade relations, the curbing arms imports may prompt Russia to change sides.
• Possible misutilisation of financial resources: Given the widespread poverty, India has limited capital to spend on defence manufacturing.
  • Also, there is risk of misutilisation of available financial resources if imports are curbed and armed forces had to rely completely on domestic manufacturing.

Challenges in indigenisation of defence manufacturing:

The only way out of high defence imports and national security imperatives is -rapid indignation of defence manufacturing. Indigenisation is the capability of developing and producing any defence equipment within the country for the dual purpose of achieving self reliance and reducing the burden of imports.

It has been facing following challenges in India:

• Lack of an institutional capacity and capability to take different policies aimed at indigenisation of defence to its logical conclusion.
• Dispute Settlement body: There is an urgent need for a permanent arbitration committee which can settle disputes expeditiously. In the USA, the procurement agency DARPA has a permanent arbitration committee which resolves such issues amicably and their decision is final.
• Infrastructural deficit increases India’s logistics costs thus reducing the country’s cost competitiveness and efficiency.
• Land acquisition issues restrict entry of new players in the defence manufacturing and production.
• Policy dilemma offset requirements under the DPP are not helping it achieve its goal. Offsets are a portion of a contracted price with a foreign supplier that must be re-invested in the Indian defence sector, or against which the government can purchase technology.

Way out:

While hyper nationalism may prompt one to suggest a total curb on imports of arms and ammunition and prepare manufacturing them within the country, one needs to understand that defence manufacturing is a capital and technology intensive industry. It will take time to establish a sound and economically viable domestic defence manufacturing sector. The best way out in the current situation would be to balance between the imports and domestic purchase. International co-operation in joint production offers best choices in this regard. For eg: The production of BrahMos Missiles is a glaring example of this phenomenon. India should also encourage entrepreneurship in the defence manufacturing sector to reap its human resources. The government needs to come out with a long-term but systematic strategic plan to address the challenges which are affecting the growth of domestic manufacturing units.

Model Mains Question:

1. Do you really think India should curb its arms imports as much as it can, and should rely more on the domestic manufacturing industry for its arms and ammunition purpose? Examine the issues involved in this.