Economy

Need to upgrade Ordnance Factories to lower import dependence, say defence experts

Twesh Mishra New Delhi | Updated on August 13, 2020

A file picture of a BMP armoured troop carrier at the ordnance factory in Medak, Telangana

Local manufacturers eye big opportunities in ‘local push’; confident of achieving targets

The Centre should focus on upgrading ordnance factory boards as it sets out to lower dependence on defence equipment imports. The needed upgrades are spread across designing of modern weapons and improving operational efficiencies, according to defence sector experts.

Earlier this month, the Ministry of Defence proposed a negative list of 101 items that should not be imported into the country. The Centre’s aim is to build self-sufficiency in defence equipment production at the earliest.

“We are way behind in terms of technology and that further delays manufacturing of crucial defence equipment products. The Defence Research Development Organisation needs to be primed up to ensure that the Ordnance Factories are better prepared to meet the requirements of modern warfare,” said K Dwarkanath, Former Director General, Ordnance Factories and Chairman, Ordnance Factory Board.

“Unlike other profit oriented corporate entities, the Ordnance Factory Board maintains spare capacity to ramp up production if demand increases. This a situation that arises in a wartime scenario. There needs to be a better assessment parameter for gauging the capability of Ordnance Factories and then accordingly improve their operations,” he added.

Bright prospects

While the Ordnance Factories need overhaul, the domestic defence equipment manufacturing industry seems confident about the prospects of the negative list.

“It is more than just attainable. In fact, given the support of the Services, the Indian defence industry can target to achieve higher indigenous content,” the Society of Indian Defence Manufacturers (SIDM) said in response to queries from BusinessLine.

“It includes military equipment and platforms such as Tracked Self Propelled Gun, Towed Artillery Gun, Short Range SAM, All types of warships, Light Combat Aircraft, Light Combat Helicopters, among others. These are either already being manufactured by the Indian industry or have been developed indigenously and being put through trials before being put into production,” SIDM said.

Commenting on the business opportunity in the domestic defence manufacturing sector, SP Shukla, Chairman — Mahindra Defence, said, “The creation of a separate procurement budget of ₹52,000 crore for domestic procurement will give a boost to indigenisation of defence production. Advance indication of the procurement budget helps Indian industry in its capacity planning and capex budgeting.”

“This promulgation of negative list of 101 items presents a huge, long-term business for domestic industry. The key here is that since no such policy (import ban) was in force, industry did not have a long-term view of business. Now they get that. And therefore, investment decisions become easier to make,” SIDM said.

Highlighting the large scope for increasing the local content, SIDM said, the current imports by Ordnance Factory Boards and Defence Public Sector Undertakings, alone are estimated to be ₹20,000 crore annually.”

An industry watcher commenting on the role that Boeing can play in the localisation efforts said, “Boeing’s sourcing alone from India stands at close to $1 billion a year from more than 200 suppliers manufacturing critical systems and components for some of Boeing’s most advanced products.”

Published on August 13, 2020

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