Centre proposes to make India a defence export hub

Nayanima Basu New Delhi | Updated on January 22, 2018


Global OEMs to be wooed to set up manufacturing units here

The proposed Defence Procurement Procedure (DPP) 2015 is expected to facilitate export promotion, making India a global hub for arms shipments.

To achieve this, the Ministry of Defence (MoD) plans to establish a separate export promotion body in collaboration with the Ministry of Commerce and Industry, which is already working on it.

“The new DPP will also make a larger pitch on making India self-reliant in defence production with lower import dependence, besides the emphasis on ‘Make in India’. The government wants to send out the message that it wants India’s defence sector to be transformed into a global exporting hub,” a senior official told BusinessLine.

A list of items, where export potential is huge, has already been drawn up by the government. This includes tanks, missiles, torpedoes, warships and other military training equipment.

Sources indicated that this will be crucial in raising the demand for defence products. At present, the sole buyer is MoD, which cannot buy equipment beyond a certain limit. Hence, to make India a lucrative destination for defence production, export promotion is a necessary step.

However, there is a section within the MoD which has reservations on identifying countries for exports. Questions are being raised internally on identification of “friendly and enemy” countries while exporting defence products, the official said, adding that “this can be addressed later”. Initially, the focus will be on attracting global OEMs to set up manufacturing units here leading to transfer of technology, he added. The MoD has already eased norms relating to export control laws.

On the other hand, foreign players have clearly stated that technology transfer will take place only when the foreign direct investment (FDI) limit is raised to 74 per cent.

According to Amber Dubey, Partner and India Head of Aerospace and Defence, KPMG India, India should consolidate its current and likely future requirements from supplier countries on a government-to-government basis and demand establishment of complete assembly lines in India.

“Most global OEMs would love India to remain a perpetual importer. The country, in turn, may be offered long-term assured off-take and freedom to export to friendly countries. Given the huge import dependence, the government should also accord a ‘deemed export’ status for defence industry for a 10-year period, extendable in future,” said Dubey.

Defence Minister Manohar Parrikar had said the defence exports are expected to double this fiscal to around ₹1,200 crore ($190 million), from ₹630 crore ($100 million) at present.

Published on November 26, 2015

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