An embargo on the import of over 100 items, used by the Indian armed forces, worth $47 billion will be introduced, according to India’s defence ministry. On August 9, India’s defence minister Rajnath Singh said that India will “introduce import embargo on 101 items beyond given timeline to boost indigenisation of defence production.”

According to a report by the Stockholm International Peace Research Institute, India was the world’s second-largest importer of major arms in 2014–18 and accounted for 9.5% of the global total imports. In the 2014-18 period, imports from Russia made up for 58% of India’s defence imports, while imports from Israel and the United States of America made up for 15% and 12% of the imports, respectively, the report added. 

Traditionally, India has been an arms reporter, but the government wants to boost the production of defence equipment and arms in India. In 2014-18, India was a major client to Israel, Russia, Canada, France and South Africa with a share of total exports of defence products to India at 46%, 27%, 13%, 9.8% and 9.8 % respectively, the report added.

Rajnath Singh stated that the embargo on imports is planned to be progressively implemented between 2020 to 2024. In a statement, he also said the government intends to reach a turnover of $25 billion through indigenously manufactured defence products and also expects to export products worth $5 billion. 

Major General (Retd) AK Siwach, a defence analyst, termed the move positive and stated that this was a much-needed push to the domestic defence manufacturing sector.

Procurements from Russia and Israel would decrease and if the arms or defence equipment is manufactured locally, it would also decrease cost, he told Nikkei Asian Review. 

Lack of transparency, allege industries body

Artillery guns, assault rifles, corvettes, SONAR systems, transport aircraft, light combat helicopters and radars are among the 101 items, the Centre said, in a statement. Of the 101 items, 69 items on the Indian Defence Ministry's embargo list will not be imported with effect from December 2020, the statement added.

India has already started manufacturing a number of items, like the towed 130- and 155-millimetre field artillery systems. Other items include 155mm/39 lightweight howitzers which will be manufactured by Mahindra, while the 155mm/52cal towed guns will be manufactured by the Defence Research and Development Organisation (DRDO), a centrally funded defence R&D institute. Recently, India procured 100 K9 Thunder self-propelled howitzer from South Korea at a per-unit cost of the 26 crore Indian rupees (~$34.75 million), but it will no longer be imported and will be made by Larsen & Toubro, a conglomerate, locally. 

Import of INSAS (Indian Small Arms System) Light Machine Gun (LMG) like Negev NG7  from Israel, super rapid 76mm naval guns from Italy, AK-74 from Russia will be stopped. Russian imports will be hugely impacted under artillery section as India plans to manufacture 122mm Grad rockets by 2022 and electronic artillery fuses and bi-modular charge systems by 2024. 

Under aviation, light combat aircraft and helicopters will be banned, but most of these are already manufactured by Hindustan Aeronautics Limited locally, like Tejas Light Combat Aircraft, HAL Rudra and the more advanced Light Combat Helicopter. However, India will continue to import big fighter jets.

In aviation, Russia’s Kamov Ka-226T helicopters will be produced locally, the per-unit cost for which from Russia was nearly 50 lakh Indian rupees (~$66,838). Apart from the light combat aircraft, fixed-wing mini drones will also be produced locally. India’s talks with the US to acquire its medium-altitude long-endurance (MALE) armed Predator-B drone may be cancelled after the ban. 

Under the sensors, Scanter-6000 radars from Denmark, Embraer ERJ-145 jets for a home-grown airborne early warning and control system from Brazil, ACTAS sonar systems from Germany will be taken off India’s defence import list.

India’s plan to ban short-range surface-to-air missiles will hurt the US as IAF already said no to American NASAMS-II networked air defence system. India also banned the naval cruise missile imports which it used to export from Russia. The ban could also impact Russia’s Kilo-class submarines lease to India.

The ban on these products will hugely impact a big part of yearly Russia’s $ 10 billion, the US’ $6 billion and Israel’s $1 Billion defence exports to India. 

However, the Associated Chambers of Commerce and Industry of India, an apex trade association of India, in its report said that there is lack of transparency in the production of defence items and that is why the industry is not willing to invest in this market. 

Dhruva Jaishankar, director of the US Initiative at the New Delhi-based Observer Research Foundation (ORF), who has carried out research on the Indian defence industry, stated that the new entrants in the defence sector are inhibited by the extremely high capital costs, carefully-guarded intellectual property and the uncertainty of the procurement process.

Implementation will be telling: retired Air Force officer

Group Captain (Retd) Ajey Lele, a Senior Fellow in the Manohar Parrikar Institute for Defence Studies, stated that though the step looks positive for India on paper, the implementation will show the real picture. “Till now, we have lacked the clarity and that is why ‘Make in India’ failed horribly in defence but now the government has provided a list of equipment for the armed forces and manufacturers, so they know what they can procure and manufacture indigenously,” he told Nikkei Asian Review.

“Most of the products on the list are already manufactured in India, so I doubt if the step will increase a lot of employment but it will definitely increase the R&D in defence sector which is good in the long term for the Indian defence market,” he added.