On August 9, 2020, under the ambitious Atmanirbhar Bharat initiative, the defence ministry (MoD) announced the imposition of an import embargo on 101 military products with a declared intent on boosting national military-industrial capacity. This much-publicised announcement has been cheered by all stakeholders of the Indian defence sector, especially the private manufacturers. The government has also created a separate budget for the purchase of locally produced military hardware.
India has long primarily relied on weapon systems imported from the Soviet Union/Russia, Western Europe and Israel, with U.S. systems gaining in importance in the last two decades.
Who was involved in this decision?
The stakeholders who were consulted before the list was drawn up include the Army, Air Force, Navy, Defence Research and Development Organisation (DRDO), Defence Public Sector Undertakings (DPSUs), Ordnance Factory Board (OFB) and private industry.
The list has been prepared by the Department of Military Affairs (DMA) headed by Chief of Defence Staff Gen Bipin Rawat. The negative imports list “offers a great opportunity to the Indian defence industry to rise to the occasion to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by DRDO to meet the requirements of the armed forces in the coming years”, the Defence Ministry said in a statement.
What items are proposed for domestic procurement?
The embargo on imports will be effective in three phases: 69 items by December 2020, 11 items by December 2021 and the remaining 21 by December 2022.
The import embargo has been implemented on a wide array of items like Field Artillery Tractor (FAT) for Medium Guns, Wheeled Armoured Fighting Vehicles (AFV), Conventional Submarines, Transportable Radar and Mini Trucks of different sizes all the way to Astra Mark I Beyond Visual Range Air to Air Missiles (BVRAAMs) and Communication Satellites.
It includes both sub-systems as well as complete systems.
An exhaustive list with the timeline of the embargo can be found her: https://www.moneycontrol.com/news/india/defence-minister-rajnath-singh-says-india-set-to-ban-import-of-101-military-items-heres-the-full-list-5667561.html
How does India benefit?
This will boost the domestic manufacturers and save crores of money which the country spent in purchasing arms and ammunition. Data from the GOI data shows that India's total this year's defense budget was 4,71,378 crore (US$ 66.9 billion) out of which more than 55% to 60% of its budget assigned is spent on its imports.
Based on the ministry’s statements, an estimated contracts worth almost Rs 4 lakh crore will be placed upon the domestic industry within the next 6 to 7 years and Of these, items worth almost Rs 1,30,000 crore each are likely to be procured for the Army and the Air Force, while the figure for the Navy is almost Rs 1,40,000 crore.
For the Navy, the government is “likely to place demands for submarines with indicative import embargo date of December 2021, of which it expects to contract about six at an approximate cost of almost Rs 42,000 crore”.
Future work on this move.
The DMA can add more items to the list over the coming years. “More such equipment for import embargo would be identified progressively by the DMA in consultation with all stakeholders”, Rajnath Singh said, and a “due note of this will also be made in the DAP (Defence Acquisition Procedure) to ensure that no item in the negative list is processed for import in the future”
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