Forest Services
Overview of Defence Proposals Approval
On April 2024, the Defence Acquisition Council (DAC) approved defence procurement proposals worth ₹2.38 lakh crore as reported by The Hindu. This approval is part of the Ministry of Defence’s (MoD) efforts to modernize the Indian Armed Forces and enhance indigenous defence manufacturing capabilities. The proposals span capital acquisitions, including advanced weapon systems, platforms, and technologies aimed at addressing evolving geopolitical and security challenges in the Indo-Pacific region.
The ₹2.38 lakh crore figure exceeds the total Union Budget defence outlay of ₹1.83 lakh crore for 2024-25, indicating multi-year procurement commitments and a strategic push towards capability enhancement.
UPSC Relevance
- GS Paper 3: Defence, Internal Security, and Disaster Management - Defence procurement reforms, budget allocation, and modernization
- GS Paper 2: Polity and Governance - Constitutional provisions on defence and legislative competence
- Essay: India’s strategic autonomy and defence self-reliance in a multipolar world
Constitutional and Legal Framework Governing Defence Procurement
Article 246(1) of the Constitution and Entry 11 of the Union List empower Parliament to legislate on defence matters, centralizing defence policy and procurement under the Union Government. The Defence Procurement Procedure (DPP) 2020 is the current regulatory framework guiding acquisition, emphasizing transparency, indigenization, and streamlined processes.
The Defence Production Policy 2018 complements procurement reforms by promoting ‘Make in India’ initiatives to reduce dependency on foreign suppliers. Historically, the Defence of India Act, 1917 provided emergency powers during wartime, while the Armed Forces Special Powers Act (AFSPA), 1958 remains relevant for operational contexts but does not directly govern procurement.
Judicial interventions, including Supreme Court rulings on offset contracts and procurement delays, have pushed for enhanced transparency and accountability in defence acquisitions.
Economic Dimensions of the ₹2.38 Lakh Crore Defence Proposals
The approved proposals represent a significant portion of India’s defence expenditure trajectory. The ₹1.83 lakh crore budget for 2024-25 allocates approximately 60% to capital acquisitions, reflecting the emphasis on modernization. India remains the world’s second-largest arms importer, accounting for 9.5% of global imports as per SIPRI 2023.
- Defence production contributes around 2.5% to India’s GDP, targeted to reach 5% by 2030 under the Defence Production Policy 2018.
- The offset policy mandates that 30% of foreign defence contracts’ value be reinvested in India, estimated at ₹70,000 crore over five years, fostering domestic industry growth.
- Defence exports stood at ₹13,000 crore in FY23, with a target to increase to ₹35,000 crore by 2025, indicating a strategic export push.
Key Institutions in Defence Procurement and Production
The Ministry of Defence (MoD) formulates policy and oversees procurement. The Defence Acquisition Council (DAC) is the apex body approving major acquisitions. The Directorate General of Defence Procurement (DGDP) executes procurement processes under DPP guidelines.
The Defence Research and Development Organisation (DRDO) leads indigenous R&D, while the Ordnance Factory Board (OFB) produces arms and ammunition, though OFB is undergoing corporatization to improve efficiency. The Indian Armed Forces provide end-user feedback essential for capability alignment. International data and benchmarking come from institutions like SIPRI.
Comparative Analysis: India vs China Defence Spending and Procurement
| Aspect | India | China |
|---|---|---|
| Defence Budget (2023) | ₹1.83 lakh crore (~$230 billion planned over multiple years) | Approx. $230 billion (~₹18 lakh crore) |
| Capital Acquisition Focus | 60% of defence budget | High, with emphasis on dual-use and advanced tech |
| Indigenous Production | 2.5% of GDP, target 5% by 2030 | Integrated defence-industrial ecosystem, significant indigenous innovation |
| Procurement Process | Complex DPP 2020 with multiple layers causing delays | Streamlined, centralized decision-making enabling faster acquisitions |
| Offset Policy | 30% mandatory reinvestment in India | Focus on self-reliance without formal offset mandates |
Challenges in Defence Procurement and Production
Despite large allocations, India faces structural delays due to the multi-layered Defence Procurement Procedure, bureaucratic red tape, and limited indigenous manufacturing capacity for critical technologies. Dependence on foreign suppliers persists for key platforms and components, unlike China’s integrated defence-industrial base.
- Procurement delays impact operational readiness and cost escalation.
- Indigenous R&D and production are hampered by fragmented industry and slow technology absorption.
- Offset policy implementation faces challenges in translating reinvestment into actual capability gains.
Significance and Way Forward
- The ₹2.38 lakh crore approval signals India’s strategic intent to modernize and reduce import dependency.
- Streamlining the Defence Procurement Procedure to reduce delays and increase transparency is critical.
- Enhancing the capacity and efficiency of domestic defence industry, including DRDO and corporatized OFB, is essential to meet 2030 targets.
- Leveraging offset policy effectively to build cutting-edge indigenous capabilities must be prioritized.
- Continuous benchmarking against global competitors like China will help calibrate policy and investment.
- DPP 2020 mandates a 30% offset on all foreign defence contracts irrespective of value.
- DPP 2020 aims to promote indigenous design and manufacturing under ‘Make in India’.
- DPP 2020 eliminates all bureaucratic layers to ensure immediate procurement decisions.
Which of the above statements is/are correct?
- India’s defence exports reached ₹13,000 crore in FY23.
- The target for defence exports by 2025 is ₹35,000 crore.
- Defence exports currently contribute more than 5% of India’s GDP.
Which of the above statements is/are correct?
What constitutional provisions empower the Union Government to legislate on defence procurement?
Article 246(1) and Entry 11 of the Union List in the Seventh Schedule empower Parliament to legislate on defence, centralizing procurement and policy under the Union Government.
What is the significance of the Defence Procurement Procedure (DPP) 2020?
DPP 2020 governs defence acquisitions, emphasizing transparency, indigenization, and procedural streamlining, including the mandatory offset policy for foreign contracts above a threshold.
How does India’s defence production contribute to the economy?
Defence production contributes about 2.5% to India’s GDP, with a target to reach 5% by 2030 under the Defence Production Policy 2018, aiming to boost domestic manufacturing and exports.
What challenges does India face in defence procurement despite large budget allocations?
India faces delays due to complex procurement procedures, limited indigenous capacity, and dependence on foreign suppliers, unlike competitors with integrated defence-industrial ecosystems.
What role does the offset policy play in India’s defence procurement?
The offset policy mandates 30% reinvestment of foreign defence contract value into Indian industry, aimed at fostering domestic capability and technology transfer.
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