Boosting domestic production of defence equipment

The Government has taken several policy initiatives and brought reforms to encourage indigenous design, development and manufacture of defence equipment in the country, thereby reducing dependency on imports in coming years. These initiatives, inter-alia, include according priority to procurement of capital items from domestic sources under Defence Acquisition Procedure (DAP)-2020;  Notification of  two ‘Positive Indigenisation Lists’ of total 209 items for which there would be an embargo on the import beyond the timeline indicated against them; Simplification of Industrial licensing process with longer validity period; Liberalisation of FDI policy allowing 74% FDI under automatic route; Simplification of Make Procedure; Launch of Innovations for Defence Excellence (iDEX) scheme involving start-ups & MSMEs; Implementation of “Public Procurement (Preference to Make in India), Order 2017”; Launch of an indigenization portal namely SRIJAN to facilitate indigenisation by Indian Industry including MSMEs; Reforms in Offset policy with thrust on attracting investment and Transfer of Technology for Defence manufacturing by assigning higher multipliers; Establishment of two Defence Industrial Corridors one each in Uttar Pradesh and Tamil Nadu.

In addition, for 2021-22, the allocation for Domestic procurement has been enhanced compared to previous years and is planned to be about 64.09 % i.e. Rs. 71,438.36 Crore of the allocated amount for military modernization.

Further, year-wise annual Turnover of Ordnance Factory Board (OFB), 09 Defence Public Sector Undertakings (PSUs), 06 other PSUs & 37 private companies manufacturing defence items, indicates the impact of measures taken by the Government to make successful “Make in India”. The year-wise details of annual Turnover of these units are as below:

The measures taken by Government for Indigenisation are likely to result in import substitution. On the basis of data received from Controller General of Defence Accounts (CGDA), the details of procurement of defence equipment (both Capital and Revenue) by the three Services (Army, Navy and Air Force), in the last three years which indicates decrease in imports, are as follows:

(Value in Rs crore)

Year	Total expenditure on Procurement (both capital and revenue)	Expenditure on Procurement (both capital and revenue) from Domestic sources	%age of expenditure on Procurement (both capital and revenue) from Domestic sources
2018-2019	93474	50500	54.0
2019-2020	108340	63722	58.8
2020-2021	139341	88632	63.3

Further. the details of procurement of defence equipment (both Capital and Revenue) done from foreign sources by the three Services (Army ,Navy and Air Force), in the last five years are as follows:

(Value in Rs crore)

 

Moreover, value of Export Authorization issued by Department of Defence Production to DPSUs/OFB and Private companies, during the last five years has been as under:

	2016-17	2017-18	2018-19	2019-20	2020-21
Value of Export Authorisation (Rs. in crores)	1521.91	4682.36	10745.77	9115.55	8434.84

 

This information was given by Raksha Rajya Mantri Shri Ajay Bhatt in a written reply to Shri Rajiv Pratap Rudy in Lok Sabha today.