India Plans Quantum Leap In Defence Production

With the draft defence production and export policy (DPEP), India has set eyes on a large slice of the global defence supply chain. By 2025, the draft positions the size of the indigenous production at $ 25 billion, with one-fifth export bound. From being the third largest importer of defence goods, India is aiming to take a leap of faith in line with the stated policy of Atmanirbhar (self-reliance).

The Ministry of Defence has put the draft defence production and export promotion policy 2020 in the public domain for comments from different stakeholders. In the course of the next three weeks, the Ministry would be engaging the stakeholders in discussions on the draft policy. The policy document will guide the country to emerge as a top ranking country in the world for defence and aerospace.

The draft policy has come on the back of India allowing 74 per cent foreign direct investment (FDI) in the defence sector earlier this year. Raising the limit from 49 per cent, Finance Minister Nirmala Sitharaman had rightly stated that the policy decision is in tune with the objective of self-reliant India. That the government would be listing out certain defence weapons and platforms exclusively for procurement from domestic production further gives weight to the objective of self-reliance.

Additionally, the draft policy document has come at a time when India is empowering the Armed forces with cutting-edge military hardware and platforms. The acquisition of the first set of Rafale fighter jets is an affirmation of the clarity in the decision making process.

The stated objectives of the draft include building a globally competitive defence industry along with aerospace and naval shipbuilding. Research and Development indeed is at the core of gaining global acceptance, and the draft policy lays much emphasis on indigenous innovations. To achieve the ambitious goals, the draft document rightly promises to reform the domestic procurement. Also, it's a welcome step that the policy document states faith in the ‘Start-ups’ and the small and medium enterprises. Seen with the policy decisions to open up the space sector for the private sector, the draft document truly shows the intent of encouraging indigenous efforts to meet the demands of the country.

Earlier, the government had clearly spelt out the intent to corporatize the Ordance Factory Boards. It is the way forward to get the best management practices to achieve the goal of gaining a prominent role in the global defence supply chain. It’s worth recalling that the Rs. 20 lakh crore Atmanirbhar package announced by the government recently had laid much emphasis on ‘Make in India’ initiatives in the defence sector also. The package had offered many financial incentives to the MSME sector, which is seen by the draft document as crucial in achieving the $ 25 billion of defence production by 2025. The MSME sector is also the largest employer in the country. The roadmap laid-out by the draft document may have a multiplier effect on employment generation within the country, which in turn could also make the Indian economy robust in the coming years.

It’s worthwhile to note that the Make in India initiative has shown welcome results in recent years, notably in electronics, including manufacturing of mobile phones. In the case of television sets, the domestic manufacturing is now catering to over 65 per cent of the total demands. Now import of television sets is put under the restrictive list. The government has already said that it would keep increasing the list of weapons for exclusive domestic procurement would surely strengthen the MSME and Start Ups.

A report by Stockholm International Peace Research Institute, released in March this year, had noted that India increased its defence exports to Rs 10,745 crores in 2018-19, a 100 per cent jump from Rs. 4,682 crores in 2017-18. This makes the draft defence production and export policy quite realistic.

Script: Manish Anand, Sr. Spl Correspondent, the New Indian Express