The Indian government has planned to support the domestic defence industry in its bid for indigenisation of defence manufacturing. While the Ministry of Defence has plans to infuse capital to support the industry, a list of defence items that will be banned from being imported is also on the cards.
Defence Minister Rajnath Singh on Monday said, “My Ministry has planned to invest about 63% of the outlay for 2021-22 on domestic procurement, i.e. about Rs 70221 crore.”
This increase, added the Defence Minister, will have a positive impact on enhanced domestic procurement, having a multiplier effect on our industries including MSMEs and start-ups. It would also increase employment in the defence sector.
Speaking at a webinar on budget announcements, the Defence Minister acknowledged the capital-intensive defence manufacturing and said that long-term importance of indigenisation in defence manufacture dictates that the government will willingly take on this short-term impact to build the Indian defence industry for the future.
“Keeping this objective in mind, Ministry of Defence has set a target to achieve a turnover of Rs 1,75,000 crores (US$ 25 billion) including export of Rs 35,000 crores (US$ 5 billion) in aerospace and defence goods and services by the year 2024,” Rajnath Singh said.
India plans to spend 130 billion dollars on military modernization in the next five years. Recently, orders for 83 indigenously designed and developed LCA MK1A worth Rs 48000 crore have been awarded to HAL. The contract for the indigenously designed Light Combat Helicopter is likely to be signed soon.
Aiming to promote indigenous design and development of defence equipment, ‘Buy Indian-Indigenously Designed Developed and Manufacture (Indian-IDDM) has been accorded topmost priority for procurement of capital equipment in Defence Acquisition Procedure 2020. During the current financial year, Rs 75000 crore worth acceptance of necessities (first step to start the process of acquisition) have been accorded out of which 87% relate to Make in India.
To cut down delay and the consequent cost increase, the Ministry is also working on bringing down the delays in timelines of capital acquisition. “We will make efforts to complete the defence acquisition within 2 years, instead of the existing 3-4 years being taken on the average,” he said.
In the process towards promoting the indigenous industry the MoD is working on another list of items to be banned form importing in future informed Rajnath Singh. The Ministry of Defence has already notified a ‘negative list’ of 101 items for which there would be an embargo on imports.
“We now intend to notify the next list of items and would also request Secretary, Department of Military Affairs that they should also consider including certain spares currently being procured from outside so that we could indigenize the same.”
The embargo on imports is planned to be progressively implemented between 2020 to 2024.
The Centre has also established the Technology Development Fund (TDF) Scheme under the ‘Make in India’ initiative to create an eco-system for enhancing cutting edge technology capability by inculcating R&D culture in industry for building indigenous state-of-the-art systems for defence applications and import substitution. To give a major boost to innovative defence technology and support start-ups in the country, the Ministry of Defence has planned to channelize about Rs 1000 crore during 2021-22 for procurement from the flagship programme of Innovation for Defence Excellence (iDEX).
Due to these reforms, the FDI in India in the defence sector has jumped by more than 200%. Rs 2,871 crore worth FDI has been invested in the defence sector in the last six years, informed the Defence Minister.