Indian Defence Industry: An Agenda for Making in India

About the Book

This book thoroughly probes the Indian Defence industry and the policies pertaining to it. Based on hard core evidence, it identifies the key shortcomings of this vital sector and provides a detailed roadmap for the Modi government’s ambitious ‘Make in India’ programme to succeed in defence production sector. Though written with a clear focus on influencing policy making, the book is presented in an accessible format to be easily understood by the wider strategic community.

About the Author

Dr Laxman Kumar Behera is Research Fellow at the Institute for Defence Studies and Analyses (IDSA), New Delhi. As a member of the IDSA’s Centre of Defence Economics and Industry, he specialises on issues related to arms procurement, offsets, defence industry, military spending, defence cooperation and arms export control. He was closely associated with two high-level Committees set up by the Ministry of Defence on Defence Acquisition and Defence Expenditure. He was a Consultant to the Task Force on Self-Reliance and Defence Modernisation, constituted by the National Security Council Secretariat (NSCS). In 2013, Dr Behera held the prestigious ICCR Chair, India Studies, at FundacaoGetulio Vargas (FGV), Rio de Janeiro, Brazil.

CONTENTS

Preface
Acknowledgements
List of Abbreviations
List of Tables
List of Figures
1. Indian Defence Industry: The Journey to Make in India
   Defence Industrialisation Phases
   Can the Indian Defence Industry Make in India?
2. Ordnance Factories
   Origin and Growth
   Management
   Employees, Production, Sales and Accounting
   R&D and Technology Absorption
   Execution of Orders
   Pricing of OFB Products
   Quality of Products
   Exports
   Capacity Utilisation and Impact of Modernisation
   Poor Inventory Management
   Outsourcing and Vendor Development
   Corporatisation
   Challenges from the Private Sector
   Conclusion
3. Defence Public Sector Undertakings
   An Overview
   From Nomination to Competition
   Defence Procurement: Share of DPSUs
   Indirect Import
   Vendor Development and Outsourcing
   R&D and Technology Assimilation
   Value Addition
   Labour Productivity
   Analysis of Profit Margin
   Exports
   Disinvestment and Listing on Stock Exchanges
   Conclusion
4. The Private Sector
   Why Private Sector in Defence Production
   Defence Production: The Role and Scope of the Private Sector
   Private Sector’s Contribution to Capital Acquisition
   What has Hindered Private Sector’s Participation
   Can the Make in India Initiative Save the Private Sector?
   Conclusion
5. Defence Research and Development Organisation (DRDO)
   DRDO: Origin and Growth
   DRDO’s Performance: An Overview
   DRDO’s Performance: A Critique
   Defence R&D: The Problem Areas
   Conclusion
6. Offsets
   Evolution of Defence Offset Policy
   Part I
   Impact Analysis

   Part II
   Lessons from International Practices
   Conclusion1

7. Review of Policy Recommendations
   Group of Ministers
   Kelkar Committee
   Sisodia Committee
   Rama Rao Committee
   V.K. Misra Committee
   Dhirendra Singh Committee
8. An Agenda for Make in India
   Set up a Make in India Council within MoD
   Articulate an R&D and Manufacturing Plan
   Appoint an Additional Secretary within the DDP for thePrivate Sector
   Reform the OFs and DPSUs
   Revitalise DRDO
   Provide Conducive Financial and Procurement Framework tothe Private Sector
   Streamline Defence Offset Policy
   Curb Indirect Import
   Involve the Industry in the Formulation of QualitativeRequirements (QRs)

ANNEXURES

Annexure A – DPP-2016: An Overview173

Annexure B – Strategic Partnership: An Overview of the Aatre Task ForceReport183

Annexure C – Foreign Investment Proposals Approved in Defence Sector (As on July 2015)187

Annexure D – Details and Status of Major Ongoing Projects(Cost above Rs. 100 crore) of DRDO

Index

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