Defence Industrial Corridor

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TOPIC: General Studies 3

• Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

What is defence industrial production corridor?

A defence corridor refers to a route or a path along which domestic productions of defence equipment by public sector, private sector and MSMEs are lined up to enhance the operational capability of the defence forces.

Defence industry is not only one of the 25 identified sectors under the Make in India programme, but it is also part of the 10 ‘Champion Sectors’ that have been identified for focused attention because of their “potential to become global champions, drive double digit growth in manufacturing, and generate significant employment opportunities.”

The government has now opened up private investment in defence production including liberalising foreign direct investment. The Defence Industrial Corridor has the potential to attract investment worth Rs 50,000 crore and create 2.5 lakh job avenues in the next five years.

India’s defence industry constitutes

• 8 defence public sector undertakings (DPSUs)
• 41 Ordnance Factories (OFs)
• 49 Defence Research and Development Organisations (DRDO)

Where?

• • North: In Aligarh; the corridor would pass through six districts — Aligarh, Agra, Jhansi, Kanpur, Lucknow and Chitrakoot.
  • South: Starting from Tamil Nadu, linking Chennai and Bengaluru.

• The locations of these corridors are strategically decided by the Defence Ministry while taking into account a natural ecosystem that could be utilised for enhancing the existing defence network.

Why?

• Need to indianise defence production
• With China and Pakistan as adversaries, there is a need to keep our armed forces modernised
• India is the largest arms importer in the world and spends annually on an average about $3.6 billion, which is more than the combined imports of both Pakistan and China. This means that we are not only sending our money abroad but also that we are at the mercy of these modern countries when it comes to protecting our own country.

How will it affect India?

Both the UP corridor and the one coming up in Tamil Nadu will be built on

• Existing defence production facilities
• Create a supply chain of MSMEs and manufacturers
• Testing and export facilitation centres

Benefits:

• Improve the connectivity of the defence forces
• Encourage domestic production of defence equipments and benefit all small and medium manufacturers along the corridor
• Make the Nation self-reliant for meeting our defence needs

Conclusion:

India is handicapped in the sense it has no client state to which it could export and geopolitical as well as internal political factors often constrain its ability to export to certain countries in the neighbourhood and beyond who may be willing to import arms from India. With the policy and procedures being in a state of flux for a long time, defence manufacturing – and consequently exports – have not really picked up in a big way.

• Our defence equipment manufacturing should be explored to tap the global market. Efforts should be made to increase export market of defence equipment.
• Government needs to bring out an industry friendly Defence Production Policy 2018 to promote domestic production. But to actually tap the domestic market, India requires a firm policy and adequate budgetary support.
• Industry, particularly the private sector, has long demanded special incentives such as infrastructure status for their investment, and deemed export benefits for certain types of procurement, to incentivize their entry into the defence production sector. It would be worthwhile for the government to examine the feasibility of such incentives.
• The Dhirendra Singh committee report (2015) deals with this issue at length, noting that “India at present does not have a structured framework and a robust system to prepare its human resources to address all issues connected with building and sustaining defence systems”. The report recommends several measures to bridge this skills gap—from changes to academic curriculum to setting up institutions that specialize in defence and security to raising a new generation of system integration managers. The government must consider these carefully.

Connecting the Dots

1. There is a need for extra efforts to build a “defence industrial ecosystem” that will not only support the country’s military requirements but also emerge as an important economic lever—generating exports, creating jobs, and spurring innovation. Discuss.