Building Indigenous Defence Industry Are Policy Statements Enough?

“The DPM has not received the same level of attention as the DPP, either from policy makers or the media” highlights CMDE LALIT KAPUR while comparing DPP and DPM.

- Lalit Kapur

In October 1980, Government of India nationalised a defunct car company and named it Maruti Udyog Limited (MUL). Two years later, MUL signed a collaboration agreement with Suzuki Motor Company (SMC), whereby SMC received a 26% equity share and helped set up a brand new assembly line at Gurgaon in double quick time. MUL made profits in its first year of operations and established a brand that quickly became the market leader in India, a position it still retains. Little wonder that the mandarins in our Ministry of Defence, seeking to implement Prime Minister Modi’s vision of turning the world’s biggest arms importer into a manufacturing powerhouse, cite the Maruti example as one they would like to replicate.

MUL could count on huge pent up demand and a massive customer base before it set up its production line in India. For the prospective domestic defence industry manufacturer, the demand certainly exists, but the customer, at least till such time as he can begin exporting, is just one: the Ministry of Defence (MoD). MoD purchase policy thus becomes of vital interest to him. An enabling policy, one that provides a nurturing environment, will help indigenous defence industry take root and grow. An ill-conceived policy which puts in place an adverse environment, on the other hand, will kill any domestic industry that does take root, effectively preventing the ‘Make in India’ dream from flowering.