In recent news, the Ministry of Defence (MoD) disclosed a negative list containing 101 defence items which are to be discontinued from import. This strategic move aims to intensify indigenisation of defence production, align with the government’s financial target of reaching turnover of $25 billion by 2025 via indigenously produced defence products, and minimize government’s defence import bill.
Promoting Indigenisation of Defence Production
The announcement is set to boost the manufacturing of domestic defence products. The authorities aim to reach a turnover of USD 25 billion by 2025. Additionally, plans include exporting indigenously made defence items worth USD 5 billion. Producers could either be private sector participants or Defence Public Sector Undertakings (DPSUs). This initiative will help reduce the country’s defence import expenses.
Negative List of Defence Items
The list includes a varied range from simple parts to high technology weapon systems such as artillery guns, assault rifles, sonar systems, transport aircraft, radars, along with several other items.
Implementation Strategy
The plan to cease import of these 101 defence items will be gradually implemented from 2020 to 2024. The MoD has already divided the capital procurement budget for 2020-21 into domestic and foreign capital procurement routes. A separate budget division with an outlay close to Rs. 52,000 crore has been allocated for domestic capital procurement in the current fiscal year. Foreign companies will not be allowed to participate in the tendering process for any government contract exceeding Rs. 200 crore.
Potential Benefits
This provision will open opportunities for the Indian defence industry to use their design and development capabilities or leverage technologies designed by Defence Research and Development Organisation (DRDO) to cater to the requirements of Armed Forces. It is a significant leap towards self-reliance in defence as per the Atmanirbhar Bharat initiative.
Concerns and Challenges
Around a third of the enlisted items are already produced in India. Certain items under development domestically are not produced in any other country like the Light Combat Helicopter and light transport aircraft. Items like the AK-203 rifle set for production by the Ordnance Factory Board with Russian collaboration, encounter issues over pricing. The listed items are of proven technologies, and do not involve any groundbreaking or futuristic technology for a next-generation weapon system or platform. It is a challenge for the government and the armed forces to maintain this commitment towards domestic producers, especially in case of an operational requirement.
The Road Ahead
By boosting its domestic manufactures, India could become a centre of excellence in the small arms sector. This strategy will also decrease the import dependency regarding arms and ammunition. Domestic manufacturing of arms could potentially create job opportunities. However, the Government must address existing challenges and focus on transfer of avant-garde technologies through bilateral contracts with primary defence players for supporting domestic industry.
Last Modified: February 8, 2024