The aims of the import ban are clear enough: over time, India must create enough domestic capabilities and production quality improvements, and the ban should save resources to propel a thorough modernisation of the Armed forces. Assuming the policy is good, it is still necessary to ask what is being done to translate it into desired success. What are the indications on the ground regarding the moves being made and pace of change, if any?
India has built platforms and defence technologies that are on the "negative list" for defence imports. So there are domestic substitutes available or in the pipeline. Another aspect is about keeping pace with advancement in technologies and proper & cost-effective production.
Most of the defence technologies are developed by DRDO, the premier defence research organisation under the GOI. It is clearly not sufficient to meet all the needs, be it primary research or product development, production techologies and maintenance. Likewise, Defence PSUs and OFBs which are tasked for building equipment can not do everything, for the lack of resources, processes, technologies and enterprise. The constraints of the present system are limiting the ambitions of the GOI and the Services.
India's answer is to involve the private sector. It is asked to come up with innovations, based on its own learnings and through working with DRDO & academia. It is licensed DRDO technologies and tasked to set up capacities and provide the best in class production quality at reasonable cost. Private sector can utilise its own competences based on existing businesses, and may have the wherewithals to manufacture to scale at high quality. Likewise, it can come up with its own technologies, through an enterprising attitude and a certain amount of risk capital.
Policy towards better co-operation and production
It is reasonable for Govt of India to want to limit the expansion of the public sector, particularly of manpower hiring, and shift production towards the private sector. For economies of scale and improving core competences, a strategic model is developed. For cost-effective and hassle-free defence manufacturing, defence industrial parks are being created, eg UP & TN defence corridors. These also cater for most defence PSUs needs. Prototype testing by the private sector can now be done in Govt-owned facilities and user acceptance trials are to be completed in a shorter timescale. A framework for contractual placements is devised to serve the requirements of the Services and promote sectorial growth, indigenisation and exports.
The scope is not restricted to a few defence industrial parks, as there are opportunities for aerospace, shipping, space, autos, electronics, telecommuncations, construction equipment, textiles, life-support, energy, materials, advanced IT services, etc. Govt is expected to promote these "strategic" sectors with their own policies and merits. The defence import ban will see them benefit from defence contracts.
New opportunities are opening up, particularly as new technologies and new types of equipment are being inducted into the Forces. The Services have signalled their future requirement for modern technologies and have shown commitment to support initiatives that will genuinely meet the needs of the Armed forces.
What has been the change?
Many say the strategic partnership model is not working. Big defence projects are at standstill or mired in complexities. Money for defence purchases is tight which is resulting in delays in placing orders of already approved indigenous platforms. Imports of basic requirements continues, for example small arms are being imported which could have been procured from local industry. Information about real ground-level change is not easy to get hold of. Clues can be found by reading about new contracts and chat from people in charge. The negative list on imports is also an "indication".
There are stories of private sector having received contracts for ammunition production. Kalyani Group and TATA are at advance stage for receiving orders for artillery and armoured vehicles. Defence PSUs are inducting new production technologies for cost-effective and better quality production. Ordnance factory boards will be corporatized. We know the UP industrial corridor has signed many MOUs and a few centres are setting up on the ground after completing land acquisition. TN corridor participants are more mature and defence MSMEs there are getting heavily engaged in outsourcing and production. Academic collaboration has accelerated. IIT Kanpur has paired with UP corridor and IIT Chennai has done it with TN corridor. It is safe to say the pace of change has accelerated simply because many DRDO platforms are at completion and are being integrated with existing inventory.
https://www.indiatoday.in/india-today-insight/story/this-is-a-self-imposed-negative-list-drdo-chairman-1714689-2020-08-25
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