At Arm’s Length From Prosperity

Should India's defence production industry be fully opened to private Indian players?

India is the world's largest arms importer, spending nearly 70% of our defence expenditure on purchases from foreign players and accounting for 12% of total global arms imports. The hold of the public sector over the domestic defence manufacturing industry is total, monopolistic and highly lacking in excellence. In light of the recently successful test run of Tejas, India's new lightweight jet fighter, after a delay of 30 years and an excessively overrun budget, we asked you if you felt the defence production sector in India should be fully opened to private players. The results are not surprising. 89% of respondents have said yes. What could be their reasons? Firstly, the entry of private players increases competition leading to much higher quality and the much needed innovation in this industry. Secondly, self-reliance in the defence sector is highly crucial to prevent heavy dependence on foreign entities, especially during times of conflict when any foreign relation could have soured. Further, as a report released by the CII and BCG suggests, over a million jobs would be created by opening up the defence production industry. On the other hand, there are understandable concerns that failure to monitor this industry could jeopardize national security. But that concern will be more applicable to foreign sellers as Boeing, GE and Dassault Aviation who we buy from, than to a domestic private industry. Military expenditure is high on India's budget allocation, and the regular delay and non compliance of budget limitations is not just unjustifiable waste of tax payers' money but also an obstacle to our defence preparedness. Hopefully, India will soon follow through with the Defence Production Policy which promotes 70% private participation in defence. Despite the enthusiasm that surrounded it's launch, it is in a state of drift with no concerted and sustained effort being made to put this policy into practice.