India's defence purchase is about 1.6 percent of the country's GDP. More than 30 percent of India's total defence budget is spent on acquisition and 90 percent of its military capability requirements are met through imports.
While the Narendra Modi government has pushed for Make in India in the defence sector to manufacture for import substitution as well as Indian-made defence products export to other countries, the state of India's defence sector remains inadequate.
Despite the ministry's promises, the defence sector has favoured foreign imports. India's arms imports have increased by 24 percent between 2013 and 2017 leading the defence sector under the government initiative subjected to criticism for purchasing weaponry without any transfer of technology.
Being the second-largest defence importer in the world, the Indian defence industry has been severely criticised for not improving its defence sector. A high ranking army official, on conditions of anonymity, told International Business Times, "In critical defence procurement, despite infrastructure facilities that are readily available in the country, design and transfer of technology are not indigenously made."
The answer to such limitations has been identified as a comprehensive development strategy to build the defence industry, according to military experts.
The Micro, Small & Medium Enterprises (MSME) participation in the defence sector, right from making a screw to making an aircraft has to be identified as important, said SASMOS HET Technologies founder Chandrashekar HG.
"If you examine the growth of Israel's defence industry, you'll realise that it is doing extremely well despite not really making an aircraft. That's because they make the supplementary and heavily important parts like unmanned aerial vehicle (UAV's), fighter aircraft parts and missiles."
India's required defence technology capabilities need to be low volume-based production. Low volume ensures a focus on quality check mechanisms. This plan is also detrimental to promote defence technology insourcing and make the defence sector self-sustaining, the officials said.
Apart from the issues pertaining to promoting MSMEs and volume-based production, while initiatives like Make in India have changed the scope of the defence sector, but the lengthy process of procurements acts as "deterrence for its own industry as well," said the Defence official.
"The defence purchase include long processes where after many deliberations and multiple committee meetings, the purchase is made. While this is required for foreign defence purchases, Indian companies are also deterred since the payment is made at the end of the tedious procurement process. For small companies, without a proper financial means, it gets difficult to meet the deadlines and make business profits", he said.
But, military technology is not one single technology and multiple challenges exist in India said, Chandrashekar HG. The fundamental characteristic of defence equipment is deterrence and not for actual use according to him.
"Hence, in the defence sector, it's pertinent to have a business model that is not just for Indian defence military capabilities. A balance between exports that participate in the global defence industry and indigenous defence technology needs to be established for a successful defence industry", he said.
SASMOS Technologies, which makes wiring harness, electro-mechanical assemblies and unit integration products to global OEMs, aims to create 1,500 jobs new jobs.
India's talent base with its IT and engineering experts, high-quality products in low and medium volume supply base complement the development in the defence and aerospace manufacturing industry said Chandrashekar HG.
"In India, people want to change. In the defence and aerospace industry, when you have low volume, you have a challenging job, that's where India is a preferred destination where a global industry can be established," he said.
Building a self-sustaining mechanism across critical technology is needed to make sure that the purchased equipment is able to be repaired indigenously, he added.
Having international clientele that includes European defence company MBDA for MICA (Interception and areal combat missiles) and ASRAAM ( Advanced short-range air-to-air missiles) programmes, Chandrashekar HG said the ability to develop technology and meet international global acceptance works as an ideal business model.
"These alignments are taking us to join hands with western companies and bringing in the technology much faster in organizations like us. Working with big companies is detrimental to developing indigenous technology expectations that can be successfully established in the global platform. This process works out well because even the west is looking for Indian business. For us, it is a global business along with Indian business", he said.
Citing India's Space Mission and ISRO's recent successful launch of its second lunar mission Chandrayaan-2, he said that India was able to achieve global space power recognition due to the focused implementation of its required space technology needs. "This focus led to creating business opportunities from Indian soil to other areas around the world," he said.
Similarly, the defence departments need a phased implementation of Make in India that links the country's required military needs and build business opportunities where indigenous companies can flourish."
