INDIGNEOUS DEFENCE MANUFACTURING

Why Indigenization of Defence is required:

  • For self-sufficiency
  • To reduce reliance on foreign players while ensuring national security
  • To save or reduce the deficit in the Balance of Payments
  • Promote job creation as well as exports
  • To minimize India’s cost of production and, as a result, the budget deficit. India became the world’s third-largest defence spender in 2019, according to the Stockholm International Peace Research Institute (SIPRI).

Challenges:

  • Défense Deficit India’s manufacturing base
  • Government ordnance factories and a lack of private participation are the primary drivers.
  • When contemplating the Indian route, the public sector (DPSUs/OFs) has by far been the preferred classification, particularly for large ticket purchases, despite its dismal track record in terms of time and cost overruns, inefficiencies, and poor financial performance. 
  • Because the defence sector is a capital-intensive enterprise with substantial investment risks, there are few private companies in the arena. 
  • By involving industry and Micro, Small, and Medium Enterprises, DPSUs, on the other hand, have done little to encourage proficient business practices (MSMEs). 
  • The 33rd Standing Committee on Defence report, Indigenization of Défense Production: Public- Private Partnership, slammed the government’s efforts to encourage indigenization.
  • Expensive and time-consuming, as well as a shaky market
  • Inadequate technological transfer by foreign firms
  • 5.Insufficient data

Assessment of Degree of Indigenization: 

  • There is currently no scientific method in place to analyse the extent/level of indigenization accomplished by the country’s defence manufacturing companies. 
  • In fact, statistical data on the extent of indigenisation accessible in the open domain does not accurately reflect the true picture because some of the data does not include the amount of import content used in DPSU/OF products.

Bureaucratic delays and license issues: 

  • Doing business in the defence industry is still difficult. Compliance with the Department of Industrial Policy and Promotion’s licensing standards is required for investment in the defence sector (DIPP)

Measures taken so far:

  • Foreign direct investment (FDI) surged by 74%.
  • Strategic collaboration model
  • Procurement policy for defence and the New Défense Acquisition Procedure
  • A restriction on 101 defence products from entering the country
  • Institutional reforms such as the Défense Acquisition Council to combat corruption and the Chief of Defence Staff to bring defence needs into harmony, as well as the Defence Planning Committee and other committees that can review purchase proposals.
  • Défense Innovation Hubs and Défense Industrial Corridors to connect defence investment zones
  • The 2020 Défense Acquisition Procedure.

Source: THE HINDU.

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