Scribd
Upload
46 views2 pages

Make in India - Defence Sector: Manohar Parrikar

The document discusses India's "Make in India" initiative to promote domestic manufacturing in the defence sector. It aims to reduce dependence on foreign countries for defence equipment by encouraging both public and private Indian companies to develop production capabilities. Recent policy changes have liberalized rules around foreign direct investment, industrial licensing, and exports to encourage more participation from Indian companies and partnerships with foreign firms to boost domestic defence manufacturing. The government plans to invest over $130 billion in the modernization of India's armed forces, creating major business opportunities for companies willing to invest in developing advanced technologies and manufacturing capabilities.

Uploaded by

dangerous saif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
46 views2 pages

Make in India - Defence Sector: Manohar Parrikar

The document discusses India's "Make in India" initiative to promote domestic manufacturing in the defence sector. It aims to reduce dependence on foreign countries for defence equipment by encouraging both public and private Indian companies to develop production capabilities. Recent policy changes have liberalized rules around foreign direct investment, industrial licensing, and exports to encourage more participation from Indian companies and partnerships with foreign firms to boost domestic defence manufacturing. The government plans to invest over $130 billion in the modernization of India's armed forces, creating major business opportunities for companies willing to invest in developing advanced technologies and manufacturing capabilities.

Uploaded by

dangerous saif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Make in India - Defence Sector

Special Feature
Ministry of Defence/
Republic Day 2015
*Manohar Parrikar

Achieving self-reliance and reducing dependence on foreign countries in defence is a


necessity today rather than a choice, both for strategic and economic reasons. The
Government in the past has created production capabilities in defence in form of Ordnance
Factories and Public Sector Undertakings to cater to the requirements of our Armed Forces.
However, there is a need to enlarge the role of Indian private sector as well to develop
capabilities and capacities for production of various defence equipments.

Our Prime Minister has taken a very important initiative in form of ‘Make in India’ to
promote and encourage domestic manufacturing of various items. The requirement for
domestic production of defence equipment is more than for any other sector because it will not
only save precious foreign exchange but will also address the national security concerns.

Government being the only consumer, ‘Make in India’ in defence sector will be driven
by our procurement policy. The Government policy of promoting domestic defence industry is
adequately reflected in the Defence Procurement Policy, wherein preferential treatment is given
to ‘Buy (Indian)’ and ‘Buy and Make (Indian)’ categories of acquisition over ‘Buy (Global)’. In the
days to come, import is going to be the rarest of the rare option and first opportunity would be
given to the Indian Industry to develop and manufacture the required systems. As Indian
companies presently may not have adequate capabilities in terms of technology, they are
encouraged to partner with foreign companies for joint ventures, technology transfer
arrangements and tie-ups.

If we look at the profile of Acceptance of Necessity (AONs) granted by Defence


Acquisition Council (DAC) in the last couple of months after the new Government has come to
power, proposals worth more than Rs.65,000 crores have been categorized under ‘Buy (Indian)’
and ‘Buy and Make (Indian)’. The process of further orienting the Defence Procurement
Procedure towards procurement from domestic industry will continue in future as well. The
procurement process would be made more efficient, time bound and predictable so that the
industry can plan its investment and R & D well in advance to meet the requirement of our
armed forces.

Till now, there were many entry barriers for the domestic industry to enter into
defence sector in terms of licensing, FDI policy restrictions etc. In the last six months, the
Government has taken several policy initiatives to ease the process of entry into defence
manufacturing. The most important is the liberalization of the FDI policy regime for Defence
sector to encourage foreign investment in the sector. FDI up to 49% is allowed through
Government route (with FIPB approval). FDI above 49% is also allowed on a case-to-case
basis with the approval of Cabinet Committee on Security wherever the proposal is likely to
result in access to modern and state-of-the-art technology in the country. Restrictions in earlier
policy related to Foreign Institutional Investment (FII) and majority shareholding to be held by
single Indian shareholder have been removed.

Even though private sector industry was allowed to enter in defence manufacturing
since 2001, after obtaining industrial licence under IDR Act, the process of obtaining industrial
licence was very cumbersome and used to act as a major road block for the industry,
particularly small and medium industry, who were in the business of making part, components,
sub systems and sub-assemblies. The Government liberalized the licensing policy and now
most of the components, parts, raw materials, testing equipments, production machinery,
castings, forgings etc. have been taken out from the purview of licensing. The companies
desirous of manufacturing such items no longer require industrial licence and will also not be
subjected to FDI ceiling of 49%. A comprehensive Security Manual indicating the security
architecture to be followed by various class of industries has been put in public domain, so that
companies could easily access the same and follow it accordingly. The initial validity of
industrial licence has been increased from two to three years.

For the first time, a Defence Export Strategy has been formulated and has been put
in public domain. The strategy outlines specific initiatives to be taken by the Government for
encouraging the export of defence items. It is aimed at making the domestic industry more
sustainable in the long run as the industry cannot sustain purely on domestic demand. A
Standard Operating Procedure (SOP) for issue of NOC for export of military stores has been
finalised and has also been put in public domain. Requirement of End User Certificate (EUC) to
be signed and stamped by Government authorities has been dispensed with for most of the
defence items, particularly parts, components, sub-systems and sub-assemblies. This will
largely ease out the export by the domestic industry. A web-based online system to receive
applications for NOC for export of military stores has been developed and has been put in
place.

There is a big opportunity in the defence sector for both domestic and foreign
investors. We have the third largest armed force in the world with an annual budget of about
US$ 38 billion and 40% of this is used for capital acquisition. In the next 7-8 years, we would be
investing more than US$ 130 billion in modernization of our armed forces and with the present
policy of MAKE IN INDIA, the onus is now on the industry to make best use of this opportunity
for the benefit of both the business as well as the nation. Besides, under offset more than Rs.
25000 crore obligations are to be discharged in next 7-8 years.

While on the one hand, Government is making necessary policy changes with regard
to procurement, investment including FDI, licensing, export etc., the industry also needs to
come up and accept the challenge of up-gradation in terms of technology and required
investments. Defence is the sector which requires huge investments and technology and is
driven by innovation. The industry, therefore, has also to change its mindset and think for long
term rather than temporary gains. We need to focus more on Research and Development and
state of the art manufacturing capabilities. The Government is fully committed to create an eco-
system for the domestic industry to rise and to provide a level-playing field to all sectors of
industry, both public and private.

*Shri Manohar Parrikar is the Union Minister for Defence (Raksha Mantri) Government of
India

(PIB Features)

You might also like