Answers: GS Mains Test Series – 2016 : GS Paper-3 (Set-1)

1.       What are the new elements in the proposed Coastal Economic Zones in comparison to the existing concepts of enclave development for export manufacture in India? Do you agree with the view that copying China’s model in Coastal Economic Zones runs contrary to the vision of development for all? Discuss critically.

India is not new to the concept of enclave development for export manufacture in the form of SEZs which are in existence since 2000.  However, the recently proposed concept of CEZ by Niti Aayog which is considered to be a carbon copy of China’s model of CEZ is largely proposed due to two reasons- to create more decent jobs in large industries and the desperation to revive exports.

CEZ is an integrated scheme and an important aspect of the Sagarmala program to kick-start port led industrialization in India.

Unlike existing Special Economic Zones (SEZs), these regions are envisaged to be much bigger like China’s Shenzhen SEZ, which is spread across 2,050 square kilometres.

However, the states would have to participate and to work with the centre to develop these CEZs and the corresponding industrial clusters. Also, the success of CEZs depends a lot on the tax structure, incentives and actual implementation.

The United Nations Conference on Trade and Development (UNCTAD) has noted that that islands of excellence, with special set of laws, rules and practices — as proposed in a CEZ — can create enormous political risk by excluding others from development.

China being an authoritarian country, political risk is not an issue. But, India being a welfare state cannot copycat China as it runs contrary to the vision of development for all of the government and where there is multiparty system.

2.       “The gradual shift from “food security” to “nutritional security” and “convenience food” brings not only new opportunities but also new challenges for India’s food processing industry.” Analyze.

In today’s world everything is about convenience and ease. This holds true even in the food sector. The focus of the government has shifted from providing food security to nutritional security and now to the concept of convenience food. This gives a major boost to the food processing industry in India as India is the second largest food producer in the world after China. It’s estimated that food-processing industry in India will double up over the next decade. Also, huge investment opportunities exist in the food processing technology, and equipment’s industry, particularly in the areas of Dairy & Food Processing, Canning, Packaging, Thermo Processing, Frozen Food or Refrigeration, and Specialty Processing.  These are the opportunities which the food processing industry holds for India.
However, the major challenge before the food processing industry in India, is the lack of proper infrastructure. Only two per cent of agricultural produce is estimated to be preserved for processing in India, currently, due to the lack of storage facilities. While in US, the about seventy percent of agricultural produce is processed at present.

National mission on food processing, Vision 2015 for food processing, new schemes for mega food parks, cold chain as well as many states reforming their outdated APMC laws are a positive step in this direction to boost the food processing industry of India.  Similar strong government initiatives to encourage the rapid growth in this sector and capitalise on the sleeping giant called food processing sector must be undertaken.

3.       Explain the working model of National Agricultural Market initiative. Do you think that markets in India NAM-ready? What are the challenges ahead to make NAM bring real change in the lives of farmers? Discuss.

On BR Ambedkar’s birth anniversary the government launched the National Agriculture Market (NAM). It is a nationwide electronic trading portal comprising a network of mandis and market yards. NAM proposed a common market wherein there would be no institutional or legal barriers to free circulation of commodities. Farmers or traders can sell with the same freedom across states as within their own state. It seeks for seamless movement of goods which would also lower intermediation costs, wastage and ultimately prices for consumers.

For NAM to be functionally operative and successful, NAM would require systems such as weighing, grading and transport, food safety certification mechanisms, cold storage, and quality standards particularly for perishables.

Also NAM would necessitate harmonisation of rules and regulations which are different currently, shared financing and coordination in implementation. Most pertinent issue that is fundamental to NAM is the case of a uniform and single point levy of taxes, which implies a trade-off between fiscal autonomy on one hand and higher administrative and compliance cost on the other.

Finally, NAM needs to be customised to the reality of Indian agricultural landscape, i.e. preponderance of small farmers. Individually small and marginal farmers will have negligible marketable surplus. Transaction and marketing costs could then easily make NAM meaningless for them. NAM will likely work if there is collectivisation of output for the portal.

4.      A series of economic reforms have been unleashed by the current government which have been hailed by Industry as game changers. Yet, variables like investment, corporate profits, economic growth, inflation, employment etc. have not been really up to our expectations. Critically examine why?

A series of economic reforms have been taken by the current government such as Make in India, UDAY scheme, Indradhanush scheme, Mudra Yojana, National Investment and Infrastructure Fund (NIIF), etc. In spite of these efforts, there is worry.

The argument here is that the government, through policies or reforms, is an enabler of growth, and the basic growth impulses cannot be changed unless there is money put on the table. We have an acute demand problem which has to be addressed for any turnaround. Hence, even if we make it very easy to do business, investment will not come in if there is insufficient demand. The Fiscal Responsibility and Budget Management (FRBM) puts constraints on the amount that can be spent by the government and probably has militated against growth.

Nothing seems to match our expectations because although we have economic growth, there is no economic development. When it comes to investment, there are various rules and regulations and redtapism which act as obstacles for investors to invest freely.

In the employment scenario, there is scarcity of employment opportunities still and there is high prevalence of disguised inflation.

Lastly, inflation is and always has been a contentious issue. High inflation puts a limitation on the capacity of an individual.

Therefore, inspite of all the efforts in the form of various schemes, there is a lot still needs to be done by the government in order to meet the expectation levels of the citizens.

5.       Critically discuss the factors that led to creation of Compensatory Afforestation Fund Management and Planning Authority? To what extent, the provisions of the Compensatory Afforestation Fund Act, 2016 are able to justify the forest rights of tribals and compensate them for the loss of forests? Analyze.

The 2008 effort to introduce Compensatory Afforestation Fund Bill could not passed. However, the bill got its approval in 2016.

The major factors which led to its creation could be-

• To establish the National Compensatory Afforestation Fund under the Public Account of India, and a State Compensatory Afforestation Fund under the Public Account of each state.
• The collected funds will be utilised for afforestation, regeneration of forest ecosystem, wild life protection and infrastructure development.
• The bill also seeks to establish National and State Compensatory Afforestation Fund Management and Planning Authorities to manage the funds.

Campa’s effort towards compensatory afforestation is worthy of praise. However it overlooks certain issues especially with respect to tribals. CAMPA will largely comprise members of forest departments. There is not adequate representation of the tribal people, environmentalists, subject experts and academics. Moreover, the bill does not consider the provisions of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006. Ideally, the provisions of the bill should have been read along with this Act – which recognises their right over the land that they have inhabited for decades – to ensure that there is no exploitation of the tribal people who are given heritable rights under the Act.

6.      “Efficient logistical network not only forms the backbone of domestic and international trade but also is a critical factor for competitiveness.” While keeping the recent Logistics Performance Index in focus, critically examine why success of Make in India depends on improvement on key dimensions of this index.

Logistics forms the backbone of domestic and international trade in any economy and is a critical factor for competitiveness. Besides providing employment and movement of goods, an efficient logistical network enables increases in the speed of doing business.
Logistics Performance Index (LPI) by World Bank is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance.

India’s ranking on the index has jumped from 54 in 2014 to 35 in 2016.

As per the index, India is ahead of comparatively advanced economies like Portugal and New Zealand. In 2016, India’s international supply chain efficiency was at 75% of top-ranked Germany.

Better performance in logistics is crucial for India as it will not only boost programmes, such as Make in India, by enabling India to become part of the global supply chain, it can also help increase trade. In 2015-16, India’s foreign trade shrank by around 15%.

Logistics Performance Index analyses countries across six components: efficiency of customs and border management clearance, quality of trade and transport infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace consignments, and the frequency with which shipments reach consignees within scheduled or expected delivery times.

All these six components are very important for the success of Make in India. An overall improvement in all these components can signal investors to make in India.

7.       The solar sector faces various hurdles including “land acquisition”, “bankruptcy”, “anti-competitive conduct”, “price and affordability” and “infrastructure”. Discuss these challenges with examples, while explaining how they affect India’s solar push.

India has a target to achieve 1 lakh megawatt of solar energy capacity by 2022. An increase in the share of renewable energy capacities including solar energy will help India reduce its dependence on fossil fuels and curb pollution.

However, solar energy sector faces certain challenges in the form of:

Land acquisition

Sourcing land for large solar projects prevents the country from meeting solar dream. Land holdings – which are usually small segments in India – present the difficulty of convincing everyone in an area to sell their respective parcels of land to create a larger single parcel. Also finding a suitable land which must be non-agricultural and unused land with good solar irradiance is challenging. After purchasing of land, finding skilled and un-skilled labourers is net task.

Anti competitive practices

An example of an international case involving Solar City and Arizona can be cited. Solar City had claimed that Arizona is using anti-competitive practices to maintain a monopoly around energy and solar power and unfairly block competition.

Bankruptcy

Big companies like Sun Edison declaring to be bankrupt after showing interest in the solar dream can also be a drawback for this sunshine industry.

Price and affordability

Herein, it is the issue of state electricity boards (SEBs), the largest distributors of electricity. It is a concern if the sebs can afford green electricity purchases.

Several SEBs are currently not even able to buy and pay for relatively cheaper conventional energy.

Infrastructure

The existing transmission capacities are already insufficient. Due to inter-state transmission congestion, millions of kilowatt-hour of electricity is not traded. Therefore, to meet the infrastructure needs, within the states, the local governments have to invest in capacities.

8.      “The development of RLV-TD was put on backburner for last few years and several factors triggered the fresh interest in this technology.” Discuss while explaining the aims and objectives of ISRO’s RLV-TD programme.

Reusable Launch Vehicle—Technology Demonstration Programme is a series of technology demonstration missions that has been conceived by the Indian Space Research Organisation  as a first step towards realising a Two Stage To Orbit (TSTO) re-usable launch vehicle.

RLV-TD is considered to be a complete ‘Made-in-India’ effort by ISRO.

The major aims and objectives of the launch are-

• To test the characterisation of the aero-thermo dynamics of hypersonic flights.
• To test the autonomous mission management of hypersonic vehicles.
• To test the necessary re-entry technology for the vehicles.

9.      What do you understand by the Robotic Process Automation (RPA)? Why RPA is seeing adoption across industries in recent times? Discuss with logical arguments.

Robotic process automation (RPA) is the application of technology that allows employees in a company to configure computer software or a “robot” to capture and interpret existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital systems.

Any company that uses labor on a large scale, RPA will boost their capabilities and save money and time.

The usage of RPA has become rampant recently. RPA is able to administer business processes, IT support processes, workflow processes, remote infrastructure and back-office work. RPA provides dramatic improvements in accuracy and cycle time and increased productivity in transaction processing while it elevates the nature of work by removing people from dull, repetitive tasks.

RPA is considered to bring more technologically-advanced solutions to businesses around the world along with cutting costs, driving efficiency and improving quality.

10.   How do you see the progress of economic reforms in India in a quarter century since their launch in 1991? Discuss keeping primary, secondary and tertiary sectors of Indian economy in focus.

The 1991 liberalising policy of the government has completed 25 years. It had led to a fundamental mindset shift. The government also did away with licence raj, ended many public monopolies, and opened several sectors to automatic approval of foreign direct investment. It was an undeniable paradigm shift, and one that changed India dramatically.

The reason behind these reforms was to increase the productivity of investment of Indian industries, to improve the performance of the public sector in order to gain a competitive edge in a fast changing global economy and to achieve greater social equity.Due to these reforms, India has achieved an important position globally- both as a key market for most multinational corporations and as a global provider of services.

Of the three sectors of economy in India, the tertiary sector has diversified the fastest, the secondary sector the second fastest, while the primary sector, taken as whole, has scarcely diversified at all.

The primary sector in which agriculture constitutes to be a major part seems to be ignored by the reforms. 60% of population is engaged in agriculture, still only a meagre 15% contribution comes from it.

It is been claimed that India jumped from primary sector to tertiary sector skipping the manufacturing sector. It is the manufacturing sector which forms the secondary sector. This leap to tertiary sector is not a good leap. Manufacturing sector must be developed in order to reap the benefits of labour and talent India has.

It is the tertiary sector (services) which benefitted the most from the reforms. Reforms paved the way for foreign investments, enabled foreign banks participation and helped for faster growth of service sector contributing around 60% to GDP.

11.    “Brown Revolution holds the key to transform India’s agri-food landscape and making agriculture sustainable.” Discuss while citing various aspects of Brown Revolution.

Brown Revolution is all about by incentivising on precision agriculture. It will save precious water,reduce fertiliser usage, maintain soil fertility and make agriculture not only sustainable, but also productive and profitable to farmers.

The Brown Revolution is a prolific leap for farmers and landowners who focus as much effort to grow soil quality as growing a crop. It’s all about reduced tillage and conservation practices that preserve soil aggregates and root networks.

This ultimately helps in cycling nutrients back into useful forms for plants, stabilize soil aggregates, build a better soil habitat and improve soil structure, tilth and productivity.

12.    What are the new digital technologies that have the ability to change the lives of people? Is India compatible with the development of these technologies? Discuss keeping focus on Digital India programme.

The new digital technologies have changed the way people communicate, shop, study, teach, marry, etc. Digital technology is prevalent at the level of policy and governance as well. For instance, registration for an Aadhaar card. An Aadhaar is a digital identity whether or not you have broadband access.

Therefore, Digital India programme is not merely about an economic model of growth, but it is suggesting that the digital is going to be at the foundations of the new India.

However, whether India is compatible or not with the new technologies is a question mark.

In order to make Digital India Programme a true success, expansion of the digital footprint of our citizens is a must need in order to get higher inclusiveness. Or else it would create a ‘digital divide’ where another demographic segment of ‘haves’ and ‘have nots’ emerges.

To make digital India a reality and make India compatible with the latest technologies certain measures can be taken-

First is the creation of digital infrastructure in remote and rural areas. Second is making these networks sustainable. For instance, in rural India we need to create adequate digital infrastructure. Thirdly, convincing private investors or businesses to invest in rural markets.

Therefore, by not just making new digitised technologies to cater to urban population will fulfill the dream of a true ‘Digital India. Even the rural masses must be able to enjoy the share of digitisation.

13.    What are the various reforms made by the Government of India towards Intellectual Property regime in the country in recent times? Do you think that these reforms are in line with the Make in India effort of the government? Discuss critically.

IP in India is regulated by several legislations, rules and regulations under the jurisdiction of different ministries/departments. The statutes governing different kinds of IP in India are the Trade Marks Act, 1999, Patents Act, 1970, Copyright Act, 1957. Designs Act, 2000, Geographical Indications of Goods (Registration and Protection), 1999, Protection of Plant Varieties and Farmers’ Rights Act, 2001, Semiconductor Integrated Circuits Layout-Design Act, 2000 and Biological Diversity Act, 2002. There is no uniformity and harmonisation in the IP policies as the nodal department for trademarks, patents, designs and geographical indications is the Department of Industrial Policy & Promotion (DIPP), which functions under the Ministry of Commerce and Industry; copyright is administered by the Ministry of Human Resource Development; semiconductor integrated circuits layout-designs is administered by the Department of Information Technology; plant varieties and farmers’ rights is administered by the Ministry of Agriculture; and biological diversity is administered by the Ministry of Environment and Forests. There are inconsistencies and overlap amongst all the IP regulations.

Therefore, to harmonise the laws and arrive at a national policy for streamlining of IP in India, the DIPP recently constituted an IPR Think Tank to draft the National Intellectual Property Rights Policy. The objectives of the new IPR policy are to establish a dynamic, vibrant and balanced IP system in India.

This will help foster innovation and creativity in a knowledge economy. This ultimately will free India from numerous IP regulations and under one umbrella law, Make in India would be a dream come reality as it would erase the doubts in the minds of investors who could free come and Make in India.

Therefore, for Make in India to be a reality, there is definitely the need of a robust IP regime in place in India.

14.   Critically examine the rationale behind Infrastructure PPP Project Review Committee (IPRC) and the Infrastructure PPP Adjudication Tribunal (IPAT) as recommended by Vjay Kelkar Committee on revisiting and revitalising the PPP model. Do you think that creation of these bodies would give a fillip to India for boosting its infrastructure sector? Justify.

Experts call for a dire need of legal framework for dispute resolution in PPP projects and public utility contracts.

A committee under former finance secretary Vijay Kelkar, recommended a two-tier framework of Infrastructure PPP Project Review Committee (IPRC) and Infrastructure PPP Adjudicatory Tribunal (IPAT). Once a stakeholder files a reference before the tribunal, and the IPAT takes cognisance of it, no party or stakeholder would be allowed to approach any court of law, and all courts shall refrain from adjudicating upon any proceedings initiated that are related to the project in question.

PPPs relate to the delivery of public services by private entities, and are awarded through a competitive bidding process. They are typically very high-value contracts, often with huge capital and operating costs, making it difficult for their developers to cope with any financial losses.

Given the long-term nature of PPPs, a perfect contract is rare, as the situation may change during a project’s lifetime. The emergence of risks not foreseen at the time of signing the agreement exposes such projects to potential distress, making them unviable for the developers and prompting demands for a renegotiation of the original terms. This results in stalled projects, which India cannot afford.

Therefore, adjudication of disputes through these 2 bodies will be a welcome move in order to carry on infrastructure projects with ease.

15.    “The state oligopoly has been responsible for a large part of the mess in India’s road transport sector.” Discuss critically.

It is believed that state oligopoly (in actual sense monopoly) is haunting the transport and education sector in India and is creating a mess especially in the transport sector.

Oligopoly or mere monopoly means there is no competition and state is the main player in undertaking the activity. State/Government must bear in mind that “Government’s business is not business”.

This can be very well highlighted with taking into consideration the Road Safety and Transport Bill which was debated in the parliament. The legislation aims at reducing India’s awful record of road fatalities/injuries (1.5 lakh deaths and over 5 lakh injured in calendar year 2015 alone). However, the bill did not get the required support.  This is all due to the oligopolistic tendencies in the road and transport sector wherein a particular lobby does not want to shift sharing of providing the services with private players.

Despite the various initiatives undertaken by the government over the past few years, the transportation sector (both freight and passenger segments) remains inefficient. The reason for this sorry state of affairs eventually boils down to policies that inhibit competition in and across the various sub-sectors. The central government has ministries to handle civil aviation, railways, marine transport and surface transportation. Counterpart agencies are found at the state and union territory level. In view of this, a permanent forum for ensuring inter-modal coordination could be set up where policy-makers of all these modes of transport come together to learn from, and respond to, the latest developments in transportation in the country and abroad.

Public service can be efficient and effective only if it adheres to the three basic principles of integrity, professionalism and empathy. This could well be guaranteed through increased participation of private players. Therefore the need of the hour is introduction of competition in every sector of economic and social activity.

For instance, competition has helped in the telecommunications. BSNL and MTNL have lost a lot of ground to private telecom operators,but their loss has been consumers’ gain, leading to an explosive growth in mobile communications.

16.   Critically discuss the UDAY scheme from financial aspects and operational efficiency aspects. Do you think that such schemes should be applied to all sectors under both the central and state governments to clean the public sector mess? Give your arguments.

The UDAY scheme—Ujwal Discom Assurance Yojana—is considered to be one of the largest financial engineering schemes of India in an attempt to disciplining electricity distribution companies (Discoms) which have built up large amount of debt, partly due to their inefficiencies as well as policies pursued by state governments.

Its two major aspects are of financial and operational efficiencies. From the perspective of operational efficiency, the scheme has put the onus on the states to make the Discoms operate well.

With respect to financial aspect, for reviving financially stressed electricity distribution utilities, State governments would take over 75 per cent of the debt with the electricity distribution utilities. The remaining debt is issued as discom bonds, backed by State governments.

In this way, UDAY scheme would be a boon for the Discom companies.

Whether such schemes should be applied to all sectors under both the central and state governments to clean the public sector mess, is a definite yes. This would help revitalise the ailing sectors and make them more competitive. Also, professional approach would seep in and the sectors can become eligible for disinvestment at a later date, which remains to be the main agenda of the government of the day.

17.    Analyze the various potential outcomes of subsuming the Railway Budget into the Union Budget.

The NDA-2 government has decided to do away with an over 90-year-old tradition of a separate budget for the Indian Railways by merging it with the general budget from next year.

An expert committee headed by Bibek Debroy had suggested that by subsuming railway budget within the Union budget, the transport services provider may be better equipped to raise funds, including from external agencies, on the strength of the sovereign to invest in projects which yield good returns over time instead of being restricted to the Indian Railway

The subsuming of the budget has positive and negative outcomes.

A separate railways budget guaranteed financial independence sufficient autonomy from interference by other arms of the government. This was the major reason why Actworth committee had recommended having a railway budget in 1924. Therefore by subsuming the budget, the autonomy and independence would be lost.

On the positive side, the discontinuation of the railway budget would reduce pressures for allocations of railway funds into the local areas of powerful politicians and parliamentarians and also ensure that the railway officials would have greater autonomy in fixing passenger and freight rates. Inclusion of the railway budget in the finance bill will hopefully also ensure that the finance ministry will take a more sympathetic view of the railways dilemma of financing social objectives.

However, legislators would continue to exert pressures on the railways through the finance ministry. And railway budgets will continue to be subject to the political projects of the government in power.

Therefore, what would be really required is that railways be set up as a corporate body with majority shares owned by the government. This will not only help reduce the influence of the government in the day to day running of the railways but also motivate it to improve its performance and try to raise more finances from the market to finance the new investments it desperately needs.

18.   In India, the seed development in case of staple crops is confined to public sector. Discuss the reasons why the private companies avoided staple crops such as wheat despite they are high volume crops.

After the 1991 LPG reforms, the private multinational corporations were allowed to enter into India’s seed market. However, these companies preferred to deal in the non-food, high value and low volume crops, because of higher profit margins. This led to significant increase in fruits, vegetables and other non-food crops such as Cotton.

However, the production of quality seeds for wheat, rice and other staples remained largely in the public sector.

The reason for this could be the main reason of inadequate availability of quality seeds for low value high volume crops such as staples whereas, there was a rise in the productivity of some high value crops, such as vegetables and fruit due to availability of quality seeds.

The other reason why private sector players did not deal in wheat and other such crops was due to their peculiar reproductive biology. This is beacause staple crops like Wheat and Rice are self-pollinating crops. This implies that these plants use their own pollens to bear a fruit. Thus, the harvested grains from one season can be saved and used in subsequent seasons without much deterioration in yield for at least two or three seasons. This is a problem in economics of seed – because all research efforts would reach to the farmer embodied in that seed only. These efforts can be almost fully appropriated by the farmers without paying anything to the researcher. This discourages private investment and necessitates public investment in improving the crop varieties in such self-pollinating crops.

Also hybridisation was a lucrative business that  private sector produced almost every seed as a hybrid seed – to keep profit as main focus – because these seeds are needed to be purchased freshly for each sowing.

19.   Successive Governments have tried and failed to reduce the alienation amongst the people of Kashmir, Jammu and Ladakh. Do you think that time has come to let each region charter its own path within the framework of the Indian Constitution? Discuss various issues and policy options.

Jammu & Kashmir is a huge state of 101,387 sqkms of which Ladakh has 58.3 per cent, Jammu 26 per cent and Kashmir 15.7 per cent. Mountainous terrain makes the task of administration challenging. Also there has always been the issue of internal disturbances, militant activities and the evergreen issue of POK.

At the time of Partition, the people of Ladakh had approached the maharaja and later (in 1949), they approached the Indian prime minister with the same demand that they did not want to be part of the Jammu and Kashmir state. They wanted Ladakh to be directly administered by Delhi.

Therefore, experts have suggested a trifurcation formula of the state- Jammu, Kashmir and Ladakh.

The cultures of Jammu, Valley and Ladakh are very different. Ethnically they are different; their language and cultures are different, their needs and requirements are totally different. Even ecologically, they fall in a different zone. Cutting across religious lines the people of Jammu and Ladakh regions are unhappy with the state government’s excessive focus on the Valley. People of these two regions are happy but are hostage to the violence in Kashmir. They believe that if restrictions imposed by the state constitution are removed, their regions would develop and progress.

Since Ladakh has immense geo-political significance, UT status means decentralisation of powers, adequate funding from the Centre and better infrastructure. The region is scenic, terrain attractively different and has lovely people meaning huge tourism potential. Autonomous Hill Councils will give people’s representatives a say. Further, restrictions on purchase of land by non-locals can be imposed to ensure that people from other states do not buy property as has happened in Uttaranchal.

Therefore, carving out three different states from the current scenario would restore pre-1836 status.The existing Jammu and Kashmir Constitution would apply to Kashmir only since they are its biggest proponents.

20.  With almost 70% of the Defence equipment still being imported, the goal of self-reliance is distant dream in our country. What steps do you suggest towards self-reliance in Defence production? Discuss.

For India indigenous defence manufacturing has been an unsuccessful quest for decades. Therefore, current government looks at Defence manufacturing as a priority sector under ‘Make in India’ scheme.

In the last five years, India has been the world’s top arms importer with a 15 per cent global share of imports. Nearly 50 per cent of the capital acquisition budget is spent on imports.

Some of the noteworthy measures which can be undertaken by the government are:

• To further increase the FDI limit from 49 per cent.
• Early implementation of Defence Procurement Procedure (DPP). A new DPP will be the starting point for any meaningful action on ‘Make in India’ in defence.
• Under ‘Make in India’, the government has to actively support the creation of a private defence industrial base.
• The government will have to fund research and development, provide a low-interest regime to reduce capital costs, provision of specific tax benefits, assure consistent sectoral policies, place firm orders and encourage exports to achieve economies of scale.
• For policies to create synergies rather than controls, it is essential that the government creates internal capacity for defence acquisition and manufacturing.
• India allocated 1.74 per cent of its GDP towards defence spending in FY16. A further increase in the per cent in the GDP would be required.
• The government policy now aims to achieve 70 per cent indigenisation in defence products by 2027. It presents a huge opportunity to the DPSUs, foreign manufacturers, Indian private players and MSMEs. But the question is of resources.
• The structure and the organisation of the ministry, particularly the department of defence production, which is responsible for DPSUs and OFs, puts private sector at a disadvantage. If form has to follow function, the ministry will have to be restructured to promote private players.