Modi's 'Make in India' campaign lifts defense sector amid China row

India's 13-month border standoff with China has proved a boost to Prime Minister Narendra Modi's "Make in India" campaign as the nation's ban on military imports bolsters the domestic weapons industry.

The Indian government last month revealed a new list of 108 military items that must be procured at home, expanding the blacklist to over 200 items, from assault rifles to helicopters and radar systems.

This followed a catalogue of 101 restricted items issued in August last year. The curbs will take effect in stages through 2025. The government sees the arms import embargo as a way to foster domestic manufacturing as the economy was pummelled by the pandemic.

"Of course, the India-China border developments are the trigger," said Srikanth Kondapalli, an international studies professor at Jawaharlal Nehru University in New Delhi. "After the disengagement at Pangong Tso in February, no major disengagement took place, let alone a de-escalation process. We don't expect normalization in bilateral relations in the future." Kondapalli added.

The standoff between the two armies began May last year in the disputed Ladakh region. The following month, a clash occurred that resulted in the first combat deaths between the two sides in 45 years.

Negotiations are ongoing between India and China to withdraw personnel from the border region, but there has not been any meaningful activity on that front since the last round of talks in April.

Artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, light combat helicopters and radars were covered in the first list, but May's list contained entries such as border surveillance systems and battlefield surveillance radar. This further suggests that New Delhi expects the Indo-Chinese border impasse to continue for the long term.

The restrictions have already propped up the domestic defence industry. The government in January approved the procurement of 83 warplanes from Hindustan Aeronautics.

The Indian contractor announced last month that it will partner with British aerospace engine manufacturer Rolls-Royce. Roughly 500 Indian businesses are expected to take part in the making of the aircraft.

The Make in India campaign, long promoted by Prime Minister Narendra Modi's administration, seeks to revive more than 20 domestic industries. The country's COVID-19 epidemic has caused several manufacturing sectors to slump, but the defence industry will get a lift in demand from the standoff with China.