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Defence can aid India’s manufacturing rise

  • The simplified procedures and eased rules for the sector will help attract foreign investment and bolster India's efforts for becoming a global manufacturing hub

The world is now reeling with the pandemic and preparing itself for the post-covid era. Globally, companies and economies are trying to support industries and curb unemployment rates. India has taken up the challenge by the horns and has come up with policy reforms to support various industries, including the defence sector.

The sector is actively being pushed towards self-reliance and exports to boost the Indian economy in these tough times. Narendra Modi, India’s Prime Minister, discussed potential reforms to make India self-reliant and an export hub in defence while battling covid-19 earlier in May. The simplified procurement procedure announced recently with a focus on capital acquisition would be key to accelerating the ongoing strategic manufacturing projects.

Through a recent announcement by Indian finance minister Nirmala Sitharaman, the foreign direct investment (FDI) limit in defence manufacturing through the automatic route has now been raised from 49% to 74%. This will help the domestic defence industry and speed up the process of indigenization. The ease of doing business in India is also expected to improve significantly, which will act as a driving force for global defence companies to be a part of the ‘Make in India’ plan.

Further, these reform measures have the potential to bring advanced technologies to India, encourage the growth of defence corridors and create new jobs in the sector. The defence corridor in Uttar Pradesh has already started work to attract defence investment from around the world. As the production ecosystem develops in India, it will facilitate the creation of more such hubs and help India emerge as a global defence manufacturing hub. Over time, these would serve not just to meet India’s domestic needs but also to establish a footprint in the export markets for defence products.

The author is EVP, marketing and business development, at RAFAEL Advanced Defense Systems Ltd.

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