Policy

Draft Defence production policy: 5,000 imported components will be manufactured locally by 2025

Our Bureau New Delhi | Updated on August 03, 2020 Published on August 03, 2020

Rajnath Singh, Defence Minister

The draft Defence Production and Export Promotion Policy (DPEPP), 2020 has proposed indigenisation of some 5,000 imported components by 2025.

These imported components, including alloys and special materials, and sub-assemblies for defence equipment and platform will be manufactured in India.

This is a part of the indigenisation policy laid out by the Department of Defence Production aiming to create an industry ecosystem to boost local production. The Defence Ministry has sought comments on the draft DPEPP 2020 by August 17.

An official statement said the DPEPP, 2020 aims to provide an impetus for self-reliance in defence manufacturing. It is envisaged as overarching guiding document of the Ministry of Defence (MoD) to provide a focused, structured, and significant thrust to defence production capabilities of the country for self-reliance and exports.

Similar to the draft Defence Acquisition Procedure (DAP) 2020, a negative list of weapons or platforms for imports has also been proposed here. “This list would be updated periodically, without compromising on the operational requirements of the Services, to allow lead-time to industry to prepare itself for any such procurement which is likely to come up, subsequent to the indicated embargo date,” the policy said. The policy notes that the Department of Defence Production has laid out a target to achieve a turnover of ₹1,75,000 crore ($25 billion) in aerospace and defence goods and services by 2025. “The share of domestic procurement in overall defence procurement is about 60 per cent. In order to enhance procurement from domestic industry, it is incumbent that procurement is doubled from the current ₹70,000 crore to ₹1,40,000 crore by 2025,” the policy said.

Long-term orders

To support the domestic industry, critical products and materials, currently being imported, could be procured through long-term orders by Defence Public Sector Undertakings (DPSUs) to incentivise the domestic industry. In such cases, the resultant single vendor should also be acceptable with due price discovery and negotiations, the policy said.

Under the proposed policy, the DPSUs and Ordinance Factory Boards (OFBs) would be mandated to have at least 25 per cent of their revenue from exports, including success fee earned as target by 2025.

Owing design rights

The draft DPEPP 2020 says that the aim is to move away from licensed production to design, develop and produce. Under the proposed approach, the nation owns the design rights and intellectual property of the systems. To enable the same, a Technology Assessment Cell (TAC) would be created which would assess the Technology Readiness Levels available in the country. This Cell will also provide advice for initiation of All Acceptances of Necessity taking note of the time frames needed for development, trials, and induction of systems to avoid immediate procurement requests to the maximum extent.

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Published on August 03, 2020
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