Indigenisation of Defence Production

The Government has taken several policy initiatives in the past few years under ‘Make in India’ program and brought in reforms to encourage indigenous design, development and manufacture of defence equipment in the country, thereby reducing import of defence equipment. These initiatives, inter-alia, include:

  • According priority to procurement of capital items from domestic sources under Defence Acquisition Procedure (DAP)-2020. 
  • Announcement of 18 major defence platforms for industry led design & development.
  • Notification of  two ‘Positive Indigenisation Lists’ of total 209 items of Services and  two ‘Positive Indigenisation Lists’ of 2851 items and 107 Line Replaceable Units (LRUs) of Defence Public Sector Undertakings (DPSUs), for which there would be an embargo on the import beyond the timelines indicated against them.
  • Simplification of Industrial licensing process with longer validity period.
  • Liberalisation of Foreign Direct Investment (FDI) policy allowing 74% FDI under automatic route.
  • Simplification of Make Procedure.
  • Launch of Innovations for Defence Excellence (iDEX) scheme involving start-ups & Micro, Small and Medium Enterprises (MSMEs).
  • Implementation of  Public Procurement (Preference to Make in India) Order 2017.
  • Launch of an indigenization portal namely SRIJAN to facilitate indigenisation by Indian Industry including MSMEs.
  • Reforms in Offset policy with thrust on attracting investment and Transfer of Technology for Defence manufacturing by assigning higher multipliers.
  • Establishment of two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu. 

Further, 68% of the Capital acquisition budget has now been earmarked for domestic sources. To enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories, the production units of Ordnance Factory Board have been converted into 7 Defence Public Sector Undertakings with 41 units, with effect from 1st October 2021. Further, to increase the production capacity of Light Combat Aircraft (LCA), a second plant of LCA ‘Tejas’ Division was established at Bangalore in February 2021. Moreover, 85 new defence industrial licenses to private Industries have also been issued during last two years. 

Source: PIB

Categories: POINT IAS

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