New Delhi: In a move to boost domestic defence production, the government plans to announce several steps under a policy to be unveiled in about a month, defence production secretary Subhash Chandra said on December 23 adding that this would be a five to ten year blueprint for resolving hurdles faced by equipment producers.
“We are coming out with a policy of defence industrial corridors, which should be ready in a month or a month and a half, where we will offer a number of facilities to the industry,” Chandra said at a conference organised by the PHD Chamber of Commerce and Industry. This would include setting up testing centres for arms makers under the public-private partnership mode, he said.
The needs of the industry, its current capacity, and access to raw material required for defence production will be considered while preparing a roadmap for the next five to ten years, Chandra said. A panel of public sector units, industry chambers, representatives of micro, small and medium enterprises (MSMEs) and original equipment manufacturers will assist the government in preparing the roadmap.
Domestic defence firms have benefited from the government’s “offset policy” under which global suppliers are required to choose a local partner for certain offset obligations like sourcing supplies or technology transfer. According to official data, till March 2019, the government has signed 52 offset contracts valued at $11.79 billion to be discharged through local offset partners. In the last three years, 21 defence offset contracts of $5.6 billion have been signed.
The defence industry has fared poorly in terms of foreign direct investment (FDI) with total inflow of just Rs 41.56 crore from April 2000 to June 2019, according to government data. In comparison, FDI inflow was nearly Rs 4.36 trillion in the services sector and Rs 2.37 trillion in the computer sector.
The government allows 100 per cent private ownership in defence production and FDI of up to 49 per cent without government approval. Foreign ownership above this level is allowed with government approval.
