Wednesday, October 20, 2021

DRDO, Indian Defence Firms To Benefit Big Time With India’s “Self-Imposed Embargo” On Arms Import

In an effort to embrace indigenization and support in-house defence manufacturing, the Indian government on Sunday made a historical decision, self-imposing an embargo on 101 defence impedimenta to create a safe environment for indigenous companies in an effort to realize the goal of “Aatm-Nirbhar Bharat” in the defense sector.

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“The embargo on imports is planned to be progressively implemented between 2020 to 2024. Our aim is to apprise the Indian defence industry about the anticipated requirements of the Armed Forces so that they are better prepared to realise the goal of indigenization”, tweeted the Union Defense Minister Rajnath Singh on August 9.

The embargoed equipment list includes a wide range of important products for the Armed forces, ranging from battle rifles, howitzers, radars to cruise missiles. However, it is to be imposed progressively in stages till 2025, with the near-immediate embargo on 70 items starting from December 2020.

Additionally,  Rajnath Singh stated “All necessary steps would be taken to ensure  that  timelines  for production of equipment as per the Negative Import List are met, which will include a co-ordinated mechanism for hand-holding of the industry by the Defence Services.”

Speaking about the defence expenditure in these products and impedimenta for the Armed forces, Singh also mentions that Rs. 4 Lakh Crore is expected to be invested in the domestic manufacturing, with a budget of Rs. 1,30,000 Crore each for the Army and the Air Force, and Rs. 1,40,000 crore for the Navy.

The DRDO and the Indian Military have always taken help of the Indian scientists and engineers, having achieved many feats in collaboration with top-notch engineering institutes like IITs and IISC and the move will enable new innovation and work as a morale booster for private firms which offer a greater quality control compared to their state-owned counterparts.

Defence stocks are also expected to make gains after the announcement, with hopes on the proper implementation of the initiative. Sanjiv Bhasin, Director of IIFL Securities, stated “There will be a marginal impact sentimentally…but we will have to see whether it flows into orders and so on. It makes the Make in India theme stronger”.

The decision is likely to benefit key companies like Kalyani group, L&T, Tata Group, Ashok Leyland, Alpha Design, Adani Group, Mahindra Defense, SSS Defense, MKU, Tonbo Imaging, IdeaForge, Punj Lloyd and would also translate into more orders for the state-owned enterprises like OFB and HAL.

Speculations also indicate that DRDO might partner with private firms, which can then either involve in joint development and manufacture or simply manufacture with technology transferred by DRDO which will bypass alleged lesser quality control on OFB products.

What do the Indian Companies have to offer?

Being the 4th strongest military, it is imperative for India to have an in-house manufacturing industry to cater to its needs especially when hostilities continue to mount in its neighbourhood. With impressive products and innovation, the Indian private companies and DRDO have shown the capability of manufacturing and indigenizing previously-imported products. Top 20 examples (in-production and development) include:

  1. Advanced Towed Artillery Gun System (ATAGS)
  2. Light Combat Aircraft Tejas
  3. Arjun tank programme
  4. Astra BVR AAM
  5. Dhanush howitzer
  6. Uttam AESA Radar
  7. DRDO’s Smart Anti-Airfield Weapon (SAAW)
  8. Light artillery systems by Kalyani group, L&T defence
  9. Indigenous production of K9 Vajra SPH
  10. Pinaka MBRL
  11. SRSAM, MRSAM, LRSAM and QRSAM based on Barak surface-to-air missile project
  12. BrahMos cruise missile
  13. Upgrade program for MiG-29UPG, Jaguar DARIN-III and Super Sukhoi
  14. Rotor craft like Dhruv, Rudra and Light Combat Helicopter
  15. Armoured vehicles by Tata and Mahindra
  16. Precision ammunition
  17. Optical sights for small arms by BEL and Tonbo Imaging
  18. Body armour and ballistic helmets by MKU
  19. Indigenous ship building and naval systems for the Indian Navy
  20. Electronic Warfare systems, field radars

With Indian hopes pinned on domestic production, the Indian Military might have to struggle with its demands for the short term due to reliance on arms imports. A close scrutiny of the list of embargoed equipment also reveals that many items listed like the Light Combat helicopter, the Pinaka MBRL, and other artillery systems are already produced or are awaiting orders in India.

However, apprehensions rise with the embargo of Light Transport Aircraft for the IAF, for which it is in dire need owing to the older airframes of AN-32 which might see retirement soon. This would open gateway for its upgrades at a faster pace and a possible inking of C-295 medium transport aircraft.

The embargo list also points to approximate deadlines or timeframes about when key projects might be formalized and put into production and operation, like the dates set for 7.62×39 mm rifles do hint towards the starting of in-house production of AK-203s in Amethi by December 2021.

Similar probabilities can be made by close analysis of the list. Several main acquisitions like that of Battle Rifles (Sig-716), carbines, and light tanks have been excluded from the embargo, also pointing to further imports of the equipment in the near future.

Similarly, the embargo on 7.62x51mm Sniper Rifles also helps to understand the procurement of Scorpion TGT rifles chambered in .338 and Barrett M95 rifles. Additionally, the Dragunov and PKM upgrade kits embargo might aid companies like SSS Defense, which offer similar products.

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