A STORM IS COMING IN THE INDIGENOUS DEFENSE INDUSRTY . HERE'S HOW.
India's defense expenditure has been racking up ferociously to become one of the world's largest. Unsurprisingly, the government has chosen to reign in & make things more efficient. Therefore, a move to make defense manufacturing indigenous makes sense.
SOME ACTUAL ADVANTAGES:
Saving foreign exchange reserves
the fact is that India is the world's largest importer of weapons. It shows the government's commitment towards acquiring state of the art weapons from leading nations like USA, Russia & Israel (3 of India's major suppliers). However it also indicates the completely dysfunctional state of the domestic industry. So developing it can reduce imports.
This can also help in stabilizing the rupee which has been on a downward trend from quite a while. Reduced imports-supply of foreign exchange falls-rupee appreciates.
Impetus to domestic industries
With this announcement of import substitution, the domestic defense industry will get a major overhaul. This is because:
government policy will be favorable (eg; tax incentive for foreign manufacturers to establish factories here)
foreign investment will increase drastically
public-private partnership will foster in this sector
state owned companies of this sector will be upgraded
Here are some major public & private companies in India with their factory location (state wise):
Self reliance
This move by the defense ministry is in line with the government's recent initiative of Self Reliant India. this move will reduce India's dependence on foreign nations. In today's complex geopolitical climate, it is imperative to hold the cards close to your chest & keep the ace up your sleeve.
Enhanced capabilities
The manufacturing sector will receive millions of dollars worth of investment from domestic & foreign investors. This will help in upgrading the technology in Indian industries. India can learn something from Israel in this regard.
POLICY CHANGES
India will follow a policy of import substitution by banning imports of 101 weapons and military platforms, including artillery guns, assault rifles and transport aircraft.
It will categorize defense capital procurement as domestic & foreign allocating Rs, 53000 crore to domestic capital procurement in the current financial year.
Focus will be laid on development of a domestic defense ecosystem.
DONE DEALS
The Defense ministry has inked a ₹2,580-crore deal to manufacture indigenous Pinaka multi-barrel rocket launchers for the Army.The contract, which has been in the making since 2017, will go to private sector companies L&T and Tata Aerospace and Defense. A significant portion of the work will also go to public sector enterprise BEML, which supplies trucks for the rocket launchers.
Tata Power Strategic Engineering Division (SED) has bagged a Rs 1,200 crore contract from the defense ministry for supply of ship-borne 3D Air Surveillance Radars to the Indian Navy over the next 10 years.
Tech Mahindra today announced its biggest defence order worth over Rs 300 crore with the Indian Navy. As part of the ‘Armed Forces Secure Access Card’ (AFSAC) Project, Tech Mahindra will implement RFID (Radio Frequency Identification) based Access Control System across all naval bases and ships.
Engineering and construction giant Larsen & Toubro on Tuesday said it has won a 'large' contract from the Indian Army for setting up an advanced IT-enabled system to operate the Armed Forces network under the Network of Spectrum (NFS).Though the company did not mention the exact value of the contract, as per its project classification, the value of a large order ranges between Rs 2,500 crore and Rs 5,000 crore.
The Defence Ministry signed a contract with Tata Power SED on Friday for modernisation of infrastructure at 37 airfields of the Indian Air Force, Coast Guard and the Navy at a cost of around Rs 1,200 crore.
State-run Bharat Earth Movers Limited NSE 3.61 % (BEML) on Tuesday said it has received a Rs 557 crore order from the Ministry of Defence (MoD) for supply of 1,512 Track Width Mine Plough (TWMP), a de-mine equipment, for T-90 tanks used by the Army
NOTE: All content in this section (done deals) was sourced from the economic times. Link Below for more:
CONCLUSION
The Indian government has been a world leader in terms of planning. It is the execution which has always been an issue.
A large amount of capital will be infused in the indigenous defense sector which will be hugely beneficial for both the private as well as the public players.
The Indian armed forces is the real winner here. It has sorely been lacking modern equipment especially the navy. This renewed focus of the government will help in modernizing cheaply to a certain extent.
The DRDO (Defense Research and Development Organisation) will play a major role in developing & transferring technology to contracted companies.
India will benefit by collaborating with foreign companies which are much more advanced & equipped.
DONE FOR THE DAY.
CHEERS!