Why indigenization of defence facing challenges like interoperability of equipment & issues with economies of scale in the short-term

Indigenization of defence refers to the process of developing and producing defence equipment within a country's own borders. This process can face several challenges, particularly in the short term, including issues with interoperability of equipment and economies of scale.

1. Interoperability of Equipment: This refers to the ability of military systems or units to operate together without restriction. When a country begins to produce its own defence equipment, it may not be compatible with existing systems or with those used by allied countries. This can lead to operational difficulties and increased costs. For example, if a country develops its own communication system, it must ensure that this system can effectively communicate with the systems used by its allies. If not, the country may need to invest additional resources to make the systems compatible.

2. Economies of Scale: This refers to the cost advantages that companies obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale. In the context of defence production, achieving economies of scale can be challenging, especially in the short term. Defence equipment often requires significant investment in research and development, and the production volumes are typically low, especially when compared to consumer goods. This means that the cost per unit can be high, making the equipment expensive. Over time, as production volumes increase, companies can achieve economies of scale. However, this is a long-term process and can be a significant challenge in the short term.

In conclusion, while indigenization of defence can bring several benefits, such as increased self-reliance and potential for innovation, it also presents challenges. These include ensuring interoperability of equipment and achieving economies of scale. These challenges are particularly pronounced in the short term, but with strategic planning and investment, they can be overcome.