【Text/Observer Net, Xiong Chaoran】According to the Indian Express on July 2 local time, the Indian Ministry of Defense will launch a comprehensive military procurement review to identify Chinese components supplied to the armed forces and assess vulnerabilities in the defense supply chain. Although existing strict regulations have explicitly prohibited the use of Chinese components in military equipment, recent reports indicate that some companies may still be purchasing Chinese components for the production of defense-related products.

In a recent event, C.S. Mann, Deputy Director of the Indian Army's Design Bureau, reiterated the army's goal of eliminating Chinese components from its suppliers. He claimed that reducing dependence on foreign countries, especially China, remains a key priority in addressing potential security risks.

The report states that at the time of this new review initiative, investigations found that certain suppliers exaggerated the quantity of locally made components, with critical parts often traceable back to China, sometimes even through third countries. In particular, drones and anti-drone systems have become sensitive areas under close scrutiny.

On May 19 local time, Indian army soldiers conducted military exercises along the India-Pakistan Line of Control. Visual China

According to the report, as part of its 2025 comprehensive reform plan, the Indian Ministry of Defense may appoint an external agency to verify the rate of domestic production, map the supply chain dependencies, and conduct detailed assessments of cost structures and technology transfer processes.

At the same time, consultants hired by the Indian Ministry of Defense will also evaluate patent ownership and investigate whether private companies are underestimating development costs, as this could lead to inflated prices later on.

The report said that in February this year, after discovering the use of Chinese components, the Indian Ministry of Defense canceled a drone procurement order on the grounds of "national security risks." Now, with the initiation of the new review mechanism, officials believe that more defense hardware may need to undergo strict inspections to ensure full compliance with security standards.

Since the tension between India and Pakistan in early May and India's "Operation Sindoor," the Indian Ministry of Defense has accelerated the pace of equipment procurement while also intensifying the scrutiny of suppliers who might be using Chinese components in frontline troops' equipment.

The Indian Express reported that under the "Make in India" initiative, the Indian Army is also working to find and support Indian companies capable of manufacturing key components domestically.

However, on March 21 this year, Reuters exclusively quoted four government officials stating that the government led by Prime Minister Modi has decided to terminate a $23 billion plan aimed at incentivizing domestic manufacturing. This "Production Linked Incentive (PLI) Scheme" was introduced only four years ago, with the initial aim of attracting companies to leave China.

It is reported that through this plan, the Indian government originally hoped to increase the share of manufacturing in the economy to 25% by 2025 and promised cash rewards if companies met their production targets before the deadline. Public records show that about 750 companies, including Foxconn, Apple's supplier, and Reliance Industries, an Indian business group, signed up for the PLI.

Two officials stated that the plan will not be expanded beyond the 14 pilot industries, and despite requests from some participating companies for extensions, the production deadlines will not be extended. Government documents and correspondence obtained by Reuters show that many companies involved in the program have failed to start production, while others that completed their production targets found that the Indian government was slow in paying subsidies.

A report compiled by the Ministry of Commerce and Industry of India stated that by October 2024, participating companies had produced goods worth $151.93 billion under the program, accounting for 37% of India's target. The document shows that only $1.73 billion in incentive funds had been disbursed, less than 8% of the allocated amount.

"If such a large-scale plan fails, what else can you expect to succeed?" said an Indian think tank scholar, expressing disappointment. He believed that the PLI might be the last chance for India to revitalize its manufacturing sector, and now the opportunity seems to have been missed. The Modi government needs to make more efforts to attract foreign investment.

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