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Representative image  (Photo: Bloomberg)
Representative image (Photo: Bloomberg)

Govt aiming for a turnover of 1.75 lakh crore in defence manufacturing by 2025

The draft policy also set an export target of 35,000 crore ($ 5 billion) in aerospace and defence goods and services in the next five years. This is part of the total projected turnover, the defence ministry said in a statement

The Indian government is aiming for a turnover of 1.75 lakh crore ($25 billion) in defence manufacturing by 2025 with the sector identified as having the potential to boost the overall economy, a draft of the Defence Production and Export Promotion Policy 2020 said on Monday.

The draft policy also set an export target of 35,000 crore ($ 5 billion) in aerospace and defence goods and services in the next five years. This is part of the total projected turnover, the defence ministry said in a statement.

The ‘Defence Production and Export Promotion Policy (DPEPP) 2020’ is currently available on the defence ministry’s website for public comments. Comments and suggestions can be sent up to 17 August.

The policy 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, the defence ministry statement said. 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, it said. The paper has recommendations to boost defence manufacturing so that the sector compliments the government's aim make the country a $ 5 trillion economy by 2024, it added.

“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 1,40,000 crore by 2025," the draft document has said.

On increasing defence exports, the policy states that Defence Attachés have been mandated to promote export of indigenous defence equipment abroad. This effort would be supplemented by select Defence Public Sector Undertakings (DPSU) which would work as export promotion agencies for certain countries with earnings linked to success fee, to promote export of defence products. There are also suggestions on how India can become part of the global defence supply chain.

The policy paper has also laid out steps to create an environment that encourages research and development, rewards innovation, creates Indian IP (intellectual property) ownership and promotes a self-reliant defence industry. It calls for the creation of a Technology Assessment Cell (TAC) with the aim of moving away from licensed production to design, develop and produce indigenously and own the design rights of the systems projected in Long Term Integrated Perspective Plan (LTIPP) of the Services. The TAC will also assess the industrial capability for design, development and production including re-engineering for production of systems like armoured vehicles, submarines, fighter aircraft, helicopters, radars with the major industries in the country.

Aircraft building work, aircraft Maintenance, Repair and Overhaul (MRO), helicopters, engine manufacturing and MRO work, Unmanned Aerial Vehicles (UAVs) and upgrades and retrofits are some of the opportunities identified by the policy in the aerospace sector.

In May, Finance Minster Nirmala Sitharaman had announced a number of measures for the defence sector including a separate budgetary outlay to procure Indian-made military hardware, increasing FDI limit from 49 % to 74 % under the automatic route and generating a year-wise negative list of weapons which would not be imported.

India is one of the world’s top buyers of military hardware as it has consistently featured among the top three importers for the past many years. Estimates suggest that the Indian armed forces could spend about $ 130 billion in capital procurement in the next five years.

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