New Delhi: India has set a target of $26-billion defence industry by 2025 and to achieve this target, the Narendra Modi government has taken several policy measures through the Ministry of Defence.
Minister of State for Defence Shripad Naik told members of Parliament of India from the Council of States (Rajya Sabha), the upper house of the bicameral legislatures, today that for the period April 2017 to Sept. 2019, the government has accorded ‘Acceptance of Necessity’ (AoN) to 107 procurement proposals under Defence Procurement Procedure 2016 (DPP-2016) worth Rs. 1,50,740.6 crore ($21 billion) approximately, under various categories of capital procurement, which promotes domestic manufacturing.
Naik said in pursuance of the ‘Make in India‘ initiative, the following policy measures have been taken:
- An innovation ecosystem for defence, ‘Innovations for Defence Excellence‘ (iDEX), was launched in April 2018. iDEX is aimed at creation of an ecosystem to foster innovation and technology development in Defence and Aerospace sectors by engaging the industries including Micro-Small-Medium-Enterprises (MSMEs), Start-ups, Individual Innovators, R&D institutes and Academia, and provide them grants/funding and other support to carry out R&D, which has the potential for future adoption for Indian defence and aerospace needs. A total of 24 contracts have been signed so far by the implementing agency – Defence Innovation Organisation (DIO).
- Separate procedure for ‘Make-II‘ category has been notified under DPP-2016 to encourage indigenous development and manufacture of defence equipment. Number of industry friendly provisions such as relaxation of eligibility criterion, minimal documentation, and provision for considering proposals suggested by industry/individual have been introduced in this procedure. A total of 44 proposals have been accorded acceptance in principle.
- The government has notified the ‘Strategic Partnership‘ (SP) model under the DPP-2016 which envisages establishment of long-term strategic partnerships with Indian entities through a transparent and competitive process, wherein they would tie up with global Original Equipment Manufacturers (OEMs) to seek technology transfers to set up domestic manufacturing infrastructure and supply chains.
- The government has notified a policy for indigenisation of components and spares used in defence platforms in March 2019 with the objective to create an industry ecosystem, which is able to indigenise the imported components (including alloys and special materials) and sub-assemblies for defence equipment and platform manufactured in India.
- The government has decided to establish two defence industrial corridors to serve as an engine of economic development and growth of defence industrial base in the country. They span across Chennai, Hosur, Coimbatore, Salem and Tiruchirappalli in Tamil Nadu and across Aligarh, Agra, Jhansi, Kanpur, Chitrakoot and Lucknow in Uttar Pradesh.
- To align with the initiative to promote ‘Ease of Doing Business‘ for MSMEs and the private sector, and to achieve national vision of ‘Make in India’, the government has formulated a policy in May 2018 on ‘Utilisation of Third Party Inspection Services‘ for effective administration.
- In order to bring more transparency and efficiency into the offset discharge process, a ‘defence offset portal‘ has been created in May 2019.
- The defence ministry has instituted a new framework titled ‘Mission Raksha Gyan Shakti‘ in November 2018, which aims to provide a boost to the Intellectual Property Rights (IPR) culture in indigenous defence industry.
- The Defence Investor Cell has been created in Feb. 2018 in the defence ministry to provide all necessary information, including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the defence and aerospace sector.
- The defence products list requiring industrial licences has been rationalised and manufacture of most of the parts or components do not require industrial license any more.
- The Department of Defence Production has notified 112 items under Public Procurement Order 2017 of the Department for Promotion of Industry and Internal Trade (DPIIT). The Defence Public Sector Undertakings (DPSUs) and the Ordnance Factory Board (OFB) are thereby required to give preference to domestic manufacturers while procuring these items in accordance with the said policy. This is expected to provide greater opportunities to the domestic industry catering to these organisations and reduce dependence on imports.
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