India, one of the world’s top importers of military hardware, has unveiled an ambitious plan to locally produce defence equipment worth ₹1.75 trillion ($25 billion) a year by 2025. The plans outlined in the latest draft of the Defence Production and Export Promotion Policy 2020 (DPEPP 2020) unveiled on 3 August 2020 underscore attempts by the government to push local manufacturing of arms to reduce costly imports and achieve self-reliance.
- Identifying the defence sector as a driver to boost the overall economy, the draft policy set an annual export target of ₹35,000 crore in aerospace and defence equipment and services within the next five years.
- India has consistently featured among the world’s top three importers for many years. Estimates suggest the Indian armed forces could spend about $130 billion to procure defence equipment in the next five years.
- The share of domestic procurement in overall defence procurement is about 60%. In order to enhance procurement from domestic industry, it is incumbent that procurement is doubled from the current ₹70,000 crore to ₹140,000 crore by 2025, according to the draft document.
- India remained the world’s second-largest arms importer during 2015-19, with Russia as its largest supplier, though Moscow’s share of the Indian weapons market declined from 72% to 56%, the Stockholm International Peace Research Institute (SIPRI) said recently.
- In May, finance minister Sitharaman announced a series of steps for the defence sector, including a separate budgetary outlay to procure locally made military hardware, lifting the limit on foreign direct investment from 49% to 74% under the automatic route and generating a year-wise negative list of weapons that would not be imported.
- The draft policy is currently available on the defence ministry’s website for public comments, which can be sent until 17 August.
- DPEPP 2020 is envisaged as “a guiding document" to provide a “focused, structured and significant" thrust to production of military hardware and platforms for self-reliance and exports.
- It is aimed at “developing a dynamic, robust and competitive defence industry", including aerospace and naval shipbuilding, to cater to the needs of the armed forces.
- The paper has recommendations to boost domestic defence manufacturing so that the sector complements the government’s aim to make the country a $5 trillion economy by 2024, it added.
- To support the local industry, critical products and materials that are currently imported could be procured through long-term orders by defence public sector undertakings (DPSUs).
- In such cases, the resultant single vendor should also be acceptable with due price discovery and negotiations, the document says.
- It has also proposed indigenization of around 5,000 imported components by 2025. These components, including alloys and special materials, and sub-assemblies for defence equipment will be made in India.
- On increasing defence exports, the policy states defence attachés in Indian embassies have been mandated and are supported to promote exports of defence equipment.