India Can Be a Global Manufacturing Hub For Defence Sector: Secretary, Defence Production
New Delhi: “India can be a global
manufacturing hub for defence sector” noted AK Gupta, Secretary (Defence
Production), Ministry of Defence, Government of India, today. Gupta was
delivering the annual YB Chavan Memorial Lecture on ‘Make in India: The Way
Ahead for Indigenous Defence Production in India’ at the Institute for Defence
Studies and Analyses (IDSA) on November 7, 2015. Defence manufacturing has been
identified as one of the top 25 sectors under the Government of India’s flagship
‘Make in India’ initiative.
Gupta noted that although it may not be
possible in a “globalised and integrated world to manufacture each and every
part or component of an equipment in one country or at one location, the
endeavor is to do significant amount of manufacturing and design work within
the country”.
Speaking on India’s goal to achieve “70 per
cent indigenisation by 2027”, he said that it would present a huge opportunity
to the Defence Public Sector Undertakings (DPSUs), Indian private players and
Micro Small and Medium Enterprises (MSMEs). The Indian Defence Industry is
currently dominated by DPSUs and Ordnance factories that contribute to 90
percent of total domestic manufacturing output and employs close to 1,60,000
people. Since the opening of private sector participation in 2001, 182
companies have been issued 307 industrial licenses and 50 companies have
commenced production, he reflected.
Liberalisation of foreign direct investment
(FDI) Policy, validity of Industrial license from three years to 15 years,
finalisation of Defence Security Manual and removal of anomalies in custom and
excise duties are some of the initiatives taken to promote private sector, he
pointed out.
Insisting that ‘Make in India’ should
reverse the current imbalance between import and indigenous manufacture, Gupta
cautioned that it would will be a gradual, step by step process, based on the
technologies and manufacturing complexities. He said that it is imperative for
the government to support the Indian firms on a long term basis during this
transition.
Drawing reference from the report submitted
by the Expert Committee constituted under the Chairmanship of Dhirendra Singh
for the purpose of evolving a framework to facilitate 'Make in India', Gupta
pointed out that though India’s strategic policy in the initial years was to
“maintain peace by striving for good relations with neighbours and not by
proactively arming itself to deter any aggressor”, a series of events
commencing with deterioration of relations with China in the late 1950’s, led
to a shift in policy. The Department of Defence Production was set up in
November 1962 with the objective of developing a comprehensive production
infrastructure to produce the weapons/ systems/ platforms/ equipments required
for defence.
The economic crisis of 1990-91 accelerated
the liberalisation process. Controls were removed and market forces were
restored. “The sector for the first time was opened to Indian private sector
participation, with FDI up to 26 per cent, both subject to licensing.” This led
to a paradigm shift from the ‘buyer-seller relationship’ to ‘co-production,
co-development and joint research & development’.
Earlier, while introducing the speaker and
the subject, Director General, IDSA, Jayant Prasad mentioned that what ever the
Government of India might be planning as a part of the new procedures, the two
specific suggestions that could be considered are i) since domestic
defence-related R&D is not mature enough, India should encourage offsets in
defence component manufacturing in India, both for domestic use and for
incorporation in third country sales of these items by Indian vendors and ii)
in order to promote export of Indian defence manufacturers, they should be
free, to the extent possible, from imported component or systems from third
countries that feature in their export control lists.
The YB Chavan Memorial Lecture is the
annual lecture organised by IDSA in collaboration with the Yashwantrao Chavan
Pratishthan, Mumbai, since 2010.
India Can Be a Global Manufacturing Hub For Defence Sector: Secretary, Defence Production
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