Defence Indigenisation

 

Context:

  • The Ministry of Defence (MoD) is laying a lot of stress on defence indigenisation, domestic procurement and defence exports.
  • During the period 2015–2021, over 60 per cent of capital procurement contracts of the MoD by number (190 out of 304) and 43 per cent by value (Rs 1,39,038 crore out of Rs 3,21,376 crore) were secured by the domestic industry.
  • The government’s Aatmanirbhar Bharat Abhiyan (ABA) aims to unlock the potential of the domestic industry and manufacturers to meet the country’s growing requirements.
  • The ABA call has special significance for the defence sector, as the country has long been dependent on imports to fulfil most of its platform as well as niche equipment requirements.

 

Background:

  • In the 2021–22 defence budget, Rs 1,000 crore has been exclusively earmarked for procurement from Start-Ups.
  • Currently, over 80 Start-Ups are developing more than 30 cutting-edge products. The government aims to double the number of products developed by Start-Ups to at least 60 by 2024.
  • In order to more actively involve the stakeholders in developing cutting-edge products most suited to the requirements of the armed forces, iDEX4Fauji was also launched in September 2020.
  • The Strategic Partnership (SP) model, first promulgated as part of the Defence Procurement Procedure 2016, is an effort to energise the domestic defence industrial ecosystem.
  • The model seeks to encourage domestic industry to enter into tie-ups with global original equipment manufacturers (OEMs) to set up manufacturing and infrastructure supply chains with transfer of technology (ToT).
  • The Defence Acquisition Council (DAC) approved the issue of Request For Proposal (RFP) for construction of six conventional submarines, in June 2021, the first such project to be pursued under this model.   
  • The foreign direct investment (FDI) through automatic route is permitted up to 49 per cent and beyond that with government approval.
  • The FDI limit was raised from 49 to 74 per cent in August 2020. The total FDI in the defence sector till January 2021 was Rs 4,191 crore.
  • It is pertinent to note that a significant portion of this, Rs 2,871 crore, was received since 2014. The government has approved 44 FDI proposals in the defence sector.

 

Srijan Defence Indigenisation Portal

  • It is instructive to look at the Srijan Defence indigenisation portal, which became active in August 2020.
  • The portal lists items which have been procured from foreign original equipment manufacturers (OEMs) by the DPSUs, ordnance factories and Service headquarters.
  • The domestic industry is encouraged to engage and partner with the private sector in order to assist in the indigenisation efforts of the MoD.
  • The domestic industry can either design, develop and produce these equipment on their own or through joint ventures with the OEMs.
  • The Srijan portal flows from the March 2019 Policy for the Indigenisation of Components and Spares used in Defence Platforms for DPSUs/OFBs.
  • The policy document notes that the value of components imported by the DPSUs/OFBs during 2017–18 was nearly Rs 14,000 crore.
  • The aim is to reduce the import bill of the DPSUs on this count.
  • The MoD specifically pledges to support the development of capabilities relating to engine technology, materials technology and electronic chip technology.
  • It also will give priority to indigenised components for testing and evaluation and encourage their exports.

 

 

Way Forward:

 

  • Even as the three decades old India–Israel defence partnership is set to grow and solidify in the coming future, India’s defence self-reliance drive will impact, to an extent, the quantum of the relationship.
  • India’s modernisation needs are huge, as well as the need to effectively meet the growing security concerns across the internal and external spectrum.
  • The all-encompassing Pakistan–China defence cooperation, which equips Islamabad with sophisticated equipment and platforms, is too stark to be ignored for India’s security planners.

Source: THE HINDU.

 

 

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