Despite the Indian government's all-out efforts to increase the share of local manufacturing of defense paraphernalia, India's defense equipment purchases from domestic manufacturers have actually gone down in the last four years. Data provided by India's Ministry of Defense on Monday revealed that defense equipment purchases from Indian vendors fell by over two percentage points while procurement from foreign vendors went up during the same period.
In 2015-16, 62.80% of the total capital expenditure was ordered from Indian vendors for the purchase of defense items by the three services which was 60.08% in the 2017-18. During the same time frame, defense equipment purchased directly from foreign companies went up to 39.92% in 2017-18 from 37.20% in 2015-16, the Indian defense ministry informed parliament on Monday.
"Last year, the total production by defense public sector undertakings and the Ordnance Factory Board was about INR 59,000 crore (around $9 billion), of which INR 13,800 crore (over $2 billion) was the value of imported components. That is roughly 24 percent. But when we look at Hindustan Aeronautics Ltd (HAL), imported components is nearly 40 percent," Defense Secretary Ajay Kumar said during a seminar in New Delhi.
The data and facts do not match the expectations of the ambitious ‘Make in India' scheme. The country's defense industries have attracted a meager $10,000 foreign direct investment (FDI) in the year 2017-18. In 2016-17, the industries failed to attract any FDI.
Nevertheless, the defense ministry has sought to justify the increase in the purchase from foreign vendors by clarifying that capital procurement of defense equipment is based on threat perception, operational challenges, and technological changes and to keep the army in a state of readiness to meet the entire spectrum of security challenges.