Govt likely to issue draft defence production and export promotion policy soon

A draft defence production and export promotion policy is likely to be issued within a month, the Centre said on Tuesday, noting that this will give a major push to the 'Make in India' programme.

"We are currently in the process of drafting the defence production and export promotion policy and hopefully, within a month or so, we would like to put it in public domain for seeking your feedback and comments which will be covering all aspects of what the finance minister announced on 16th of May," Defence Production Secretary Raj Kumar said at a webinar attended by various defence companies.

On May 16, Finance Minister Nirmala Sitharaman had announced a series of initiatives to promote indigenous defence production which included making separate budgetary outlay to procure Indian-made military hardware, increasing FDI limit from 49 per cent to 74 per cent under the automatic route and generating a year-wise negative list of weapons whose import won't be allowed.

Kumar said that in "addition to indigenisation, to give a push to 'Make in India', to seek substitute of imported items, all those and number of those other similar things will be there as a part of the defence production and export promotion policy".

"The idea is that in the process of indigenisation, there is a possibility where the investment per se may not be justified. There may be a need for some kind of capital subsidy. We are looking into that aspect. Once the policy is put into public domain, we will seek your feedback and views," he further explained.

Currently, the size of the domestic defence industry is of the order of $12 billion. Out of which, 80 per cent is the share of the defence public sector units (DPSUs) and 20 per cent is of the private sector.

"We expect the turnover of the domestic defence industry to go up to$25 billion by 2025," Kumar said at the webinar that was organised by PHD Chamber of Commerce.

"This can only happen if we make conscious efforts to minimise imports beginning with the negative list of imports, realistic GSQRs (General Staff Service Quality Requirements), provide enough budgetary support for domestic procurement," he said.

There is a focus within the government on indigenisation of imported items, including materials, said the Secretary of the Department of Defence Production.

A committee convened by PHD Chamber of Commerce and headed by Midhani CMD S K Jha on the matter of substitution of defence imports listed out various important issues for our consideration, he said.

"They have pointed out that per-qualification testing takes a lot of time and involves a substantial expenditure. They have mentioned that attention needs to given on the issue of long-term supply contracts to indigenous manufacturers," Kumar said.

"The single biggest point that I saw in that committee's report was related to the non availability of the technical specifications (for defence materials and products) that becomes a bigger drawback," he added.

What we basically now need is technology, volume, viability and certification capability in house, that is within the country, he said.

"I would like to list out the steps that we need to take. First and foremost step we need to take is develop technical specifications in collaboration with research institutions and labs, followed by the development of manufacturing processes. In case of certain identified materials, we plan to adopt a mission mode approach led by the DRDO," he said.

The Defence Research and Development Organisation (DRDO) works under the Ministry of Defence only.

"Secondly, make one procedure under Defence Procurement Procedure (DPP) to develop these identified materials with the support of the government," Kumar noted.

"Thirdly, we should develop testing and certification facilities. So, we will like to set up a task force under the Directorate of Standardization for developing these testing and certification facilities in the country," he said.

Also, India should try for import of technology under 'transfer of technology' route or through inter-governmental agreements to FDI route, especially in those cases where we have got domestic manufacturing capability but the technology is not available at this point of time, he said.