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Indian Army to stop importing ammunition from next fiscal year: How is India becoming ‘Atmanirbhar’ in defence production?

By: Team India Tracker

Indian Army to stop importing ammunition from next fiscal year: How is India becoming ‘Atmanirbhar’ in defence production?

Government has taken various steps to improve Indian defence products and make them competitive globally. Image Source: IANS

In addition to the now-corporatized Ordnance factories, a number of private sector companies have entered the market in recent years, and new munitions manufacturers are opening up around the nation.

According to a senior procurement officer, the army plans to cease importing any ammunition starting in the next fiscal year as the domestic industry has increased its capacity to meet demand and is even in a position to capture a share of the global market for ammunition.
While it hopes to totally cut off imports by 2025–2026, the army, which until a few years ago was heavily dependent on imports to meet annual requirements, has already found indigenous sources for nearly 150 of the 175 types of ammunition it uses.

"We will not import any ammunition in the upcoming fiscal year. Apart from situations when the industry finds it unprofitable to produce them in large enough quantities," Maj Gen VK Sharma, ADG (Procurement), Indian Army stated. Speaking at a seminar on Ammunition Production hosted by the PHD Chamber, the officer stated that the army is now spending between ₹6000 and ₹8000 crore a year on ammunition, all of which will now be sourced from India.

In addition to the now-corporatized Ordnance factories, a number of private sector companies have entered the market in recent years, and new munitions manufacturers are opening up around the nation. The army believes that Indian businesses have the potential to grow significantly and compete globally given their future capabilities.

The Ordnance Factory Board (OFB), a subordinate office of the Ministry of Defence, was converted into seven new entirely government-owned corporate entities with professional management: Advanced Weapons and Equipment India Limited, Troop Comforts Ltd, Avani Armoured Vehicles, Munitions India Limited, India Optel Limited, Gliders India Limited, and Yantra India Limited, in accordance with the government's historic Atmanirbhar Bharat policy. Before the OFB took control of the 41 ordnance manufacturers in the nation, many of them were losing money and operating poorly. The performance of all seven of these recently established defence businesses increased, and in the first half of their operations, six of them declared preliminary profits.

Government has taken various steps to improve Indian defence products and make them competitive globally. To achieve "Aatmanirbharta in Defence," the government has placed a focus on the indigenization of several defence products. The locally produced indigenous goods become globally cost competitive, and it also makes it easier for MSMEs to be integrated into the global supply chain. Regularly and without charge, the DRDO transfers new technologies to the industries. Industries have been provided free excess to DRDO patents. DRDO conducts Niche Technology Demonstrations by engaging industries. This provides a dual benefit by assisting industries with user inputs for product improvement and for self-testing and evaluation of their products in field conditions.

Source: Department of Defence Production, Ministry of Defence

Weapon Simulators, Torpedo Loading Mechanisms, Alarm Monitoring & Control, Night Vision Monocular & Binocular, Light Weight Torpedo & Fire Control Systems, Armored Protection Vehicles, Weapons Locating Radar, HF Radio, Coastal Surveillance Radar, etc. are some of the major defence equipment exported over the past five years. At present, the exports are being made to more than 85 countries all over the world. Names of the countries cannot be divulged due to strategic reasons. Over 100 firms are actively exporting defence products. Multiple sophisticated defence systems including 155 mm Advanced Towed Artillery Guns, BrahMos Missiles, etc, have been exported to other countries.

Source: Department of Defence Production, Ministry of Defence

Ammunition is not the only stuff India will soon start manufacturing entirely domestically. It is currently manufacturing ever more advanced weaponry. Out of 4,666 listed products, 2,920 defence items have been indigenized by India thus far, according to Director (DIP), Department of defence Production, Amit Satija, three months ago. Assemblies, subassemblies, raw materials, essential spare parts, and components are among these things. According to Air Chief Marshal VR Chaudhari, in the last two to three years, the IAF has indigenised about 60,000 components.

India’s first indigenously built aircraft carrier- INS Vikrant was launched in 2022 at the Cochin Shipyard Limited. Vikrant has been built with state of the art automation features and is the largest ship ever built in maritime history of India. One of the important steps taken towards boosting the manufacturing of defence equipment in India was increasing the FDI in defence sector from 49 percent to 74 percent under the automatic route and 100 percent through the government route. Also, government notified the Strategic Partnership (SP) Model in 2017, which envisages establishment of long-term strategic partnerships with Indian entities, wherein they would tie up with global OEMs to seek technology transfers to set up domestic manufacturing infrastructure and supply chains.

An 'offsets policy', instituted by the previous UPA government, mandated that foreign corporations awarded military contracts in India must contribute a minimum of thirty percent of the contract value to the domestic aerospace or defence sector. Most projects, nevertheless, were stalled in the approvals and other procedures. The government changed the guidelines in 2017 to give foreign companies more latitude in selecting local partners and assigning tasks. The strict offset policy restrictions had prevented $3.5 billion in foreign investments, but the modifications helped release them.

Under the Defence Acquisition Procedure (DAP) 2020, highest preference is provided to the ‘Buy Indian (Indigenously Designed Developed and Manufactured -IDDM) under which at least 50 percent material in a defence equipment should be ‘Indian Component (IC)’ as compared to 40 percent in the Defence Procurement Procedure (DPP), 2016. Also, a new category ‘Buy (Global-Manufacture in India) was introduced in the DAP 2020 in order to incentivise the foreign companies to manufacture in India. It also allows the foreign entities to set up Maintenance, Repair and Overhaul (MRO) facilities in India. 

In December 2019, the Department of Military Affairs (DMA), or the Sainya Karya Vibhag, was created in the Ministry of Defence (MoD).  Inter alia the subjects allocated to the DMA include promoting jointness in procurement, training and staffing, optimal utilisation of resources by bringing about jointness in operations, including through establishment of joint/ theatre commands,” and “promoting use of indigenous equipment.

By 2028–2029, the government wants to almost quadruple India's yearly defence output to ₹3 lakh crore. The goal for defence exports is more than doubled, from the current level of ₹21,083 crore to ₹50,000 crore. The overall annual defence output target for 2024–2025 is ₹1,75,000 crore, including exports valued at ₹35,000 crore.

A report published by Jefferies states that the industry expects a noticeable 13 percent industry Compound Annual Growth Rate (CAGR) from FY23 to FY30, with an anticipated domestic defence opportunity of between $100 and $120 billion over the next five to six years.

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