The Defence Industry Can Lead The Next Phase Of Industrial Growth In India: Jayant Patil

On the defence industry emerging as the catalyst of industrial growth in the next ten  years
By 2025 the share of manufacturing in India’s GDP is targeted to grow from 17 per cent to 25 per cent. To reach this target, the manufacturing sector needs to grow at a CAGR of more than 14 per cent. The defence sector can be a game changer and play a major role towards achieving this vision. I believe, with the right set of policies in place, with appropriate budgetary support, the defence industry can lead the next phase of industrial growth in India.

With the revenue growth in public sector defence enterprises stabilised at a CAGR of 8-8.5 per cent, there is plenty of room for growth of  the private sector, given the policy focus towards indigenising defence. For example, L&T has been active in the defence and strategic sector since the 1980s and has built an enviable track record. Over  the years L &T has established state-of-the-art dedicated work centres, including a globally benchmarked naval shipyard and submarine construction facilities at Kattupalli and Hazira, an armoured systems manufacturing and  testing complex at Hazira, a precision manufacturing and systems complex for aerospace and missiles manufacturing and integration at Coimbatore, an advanced composites facility at Vadodara and Coimbatore, a specialised strategic systems complex for weapon  and engineering systems and sensors at Talegaon, Pune, a strategic electronics centre at Bangalore, and a marine switchgear & control systems unit at Navi Mumbai.

On the policy framework at the macro level 
The current leadership has put defence manufacturing at the core of its Make in India initiative, with focus on achieving self-reliance and building exports to friendly nations as a strategic imperative. Over the past few years, the AoN approval process has been fast tracked. Industry is heard before making all fresh acquisition categorisation decisions and consequently, the increased number of programmes being categorised with a policy bias towards indigenous sourcing in the form of ‘Buy Indian’, IDDM, or ‘Buy & Make (Indian)’. This will serve well in the short to medium term and provide opportunities to industry to prove capabilities and enhance indigenisation.

On the policy overhaul necessary 
There is continued ordering on government-owned and government-controlled public sector undertakings in keeping with old decisions. This is visible from more than 90 per cent orders (by value) nominated across the naval segment and nearly entire orders in the air segment. There is a serious need for decision makers to treat private investments on par with investments in the public sector as national assets and trust the private industry as nation-builders and provide them a level playing field.

On the offset policy necessary
Post liberalisation, the private sector has proven that it can significantly scale up with speed and attain global benchmarks. For example, L&T is producing the K9 Vajra-T Howitzers. It is often heard from FOEMs that the Indian defence industry does not have the ability to absorb the quantum of offsets, while the truth is completely different as can be seen from a number of spectacular success stories of Make in India in the defence sector.