Proposed MoD policy aims to double India’s defence production in 5 years - Broadsword by Ajai Shukla - Strategy. Economics. Stuff.

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Tuesday, 4 August 2020

Proposed MoD policy aims to double India’s defence production in 5 years


 

By Ajai Shukla

Business Standard, 4th Aug 20

 

Combining multiple announcements (that) were made under Atmanirbhar Bharat package, into a single policy document, the Ministry of Defence (MoD) on Monday released a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020) for public consultation and comments.

“DPEPP 2020 is positioned as MoD’s overarching guiding document to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports,” states the draft policy.

 

Mirroring the draft Defence Production Policy of 2018 (DPrP-2018), which was never finalised, the DPEPP 2020 sets out the target: “To achieve a turnover of Rs 1,75,000 crores (US$ 25 billion) including export of Rs 35,000 crore (US$ 5 billion) in aerospace and defence goods and services by 2025.”

 

This requires India’s aerospace and defence industry to more than double in size over the coming five years, “from the current Rs 70,000 crore to Rs 140,000 crore by 2025.”

 

 Elsewhere in the draft policy, the size of India’s defence industry is estimated to be Rs 80,000 crore . “While the contribution of public sector is estimated to be Rs 63,000 crores, the share of private sector has steadily grown to Rs 17,000 crores over the years,” states the draft DPEPP 2020.

 

The new policy backtracks significantly from the draft DPrP-2018, which aimed at catapulting India into the world’s top five defence producers.

 

The draft DproP-2018 had stipulated 13 technology realms where India would achieve self-reliance by 2025, including in building fighter aircraft, helicopters, warships, tanks, missile systems, gun systems, small arms and ammunition.

 

Instead of this ambitious goal, the draft DPEPP 2020 echoes the recently issued draft Defence Acquisition Policy of 2020 (DAP 2020) in stating: “A negative list of weapons/platforms would be notified with year-wise timelines for placing an embargo on import of such items from those dates.”

 

Providing further flexibility for import, the draft policy states: “This list would be updated periodically, without compromising on the operational requirements of the services.”

 

The new policy states the “aim is to move away from licensed production to design, develop and produce (defence equipment so that) the nation owns the design rights and intellectual property of the systems.”

 

To identify systems and platforms that are ripe for indigenisation, the policy proposes creating a Technology Assessment Cell, with representation from the three services, to “assess the industrial capability for design, development and production, including re-engineering, for production of various major systems like armoured vehicles, submarines, fighter aircraft, helicopters, radars, with the major industries in the country.”

 

The draft DPEPP 2020 proposes categorising major defence industries into two types: “Systems integrators with design, development, production, testing and certification capability and ability to develop and sustain the ecosystem required for the next 25-30 years.”

 

The second category is of systems integrators who lack design and development capability, but are capable of partnering the Defence R&D Organisation (DRDO) in developing and manufacturing equipment.

 

Mapping out the landscape for the private sector, the draft policy states: “In the private sector, many engineering majors have diversified and joined the defence sector. More than 460 licences have so far been issued to private companies for production of defence equipment. The defence industry is ably supported by a strong base of over 8,000 MSMEs (micro, small and medium enterprises) that provide strength and vibrancy to the defence supply chain.”

 

To support MSMEs and start-ups, the MoD will create an indigenisation eco-system that will transfer the production of imported components and sub-assemblies into India. “5,000 such items are proposed to be indigenised by 2025,” states the draft policy.




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