PM Modi Lauds His Government’s Initiative To Boost Defence Manufacturing In India

Shailesh Kumar, National Defence
Chennai, 12 April 2018

Prime Minister Narendra Modi today laterally took on the previous Congress Government for being lax on defence matters. He cited the case of BPJs for Indian Army and procurement of fighter jets for Indian Air Force to prove his point. Modi Government has recently signed a contract with Indian company SMPP Private Limited for procurement of 1.86 lakhs bullet proof jackets and released a global RFI for procurement of 110 fighter aircrafts.

“You would have seen how the issue of providing bullet proof jackets to Indian Army soldiers was kept hanging for years”.

“And, you would have also seen that we have brought the process to a successful conclusion with a contract that will provide a boost to defence manufacturing in India. You would also recall the long-drawn process of procurement of fighter aircraft that never reached any conclusion”, he added.

Prime Minister was speaking at the inauguration of 10th edition of DefExpo 2018, being held first time ever in South India.

“We have not only taken bold action to meet our immediate critical requirements, but have also initiated a new process to procure 110 fighter aircraft.We do not want to spend ten years in discussions without any tangible outcomes. We will work with you with a sense of mission to keep our defence forces equipped with state-of-the-art systems, and to create the necessary domestic manufacturing ecosystem to achieve this. And, in all our efforts to pursue efficiency and effectiveness in partnership with you, we will be guided by the highest ideals of integrity and probity”, Prime Minister said.

PM Modi also elaborated as how his Government has changed the whole gamut of defence manufacturing from being defence importer to defence exporter. The latest edition of DefExpo is projecting India as ’emerging hub of Defence Manufacturing’. Prime Minister Modi lauded his ‘Make In India’ initiative to promote the indigenous defence industry.

Modi Government has brought the Defence Procurement Policy 2016 which modified the offset procedures.

“Initial validity of Industrial License has been increased from 3 years to 15 years, with provision to further extend it by 3 years”.

“Offset guidelines have been made flexible by allowing changes of Indian Offset Partners and offset components, even in contracts already signed”.

“Foreign Original Equipment Manufacturers are now not required to indicate the details of Indian Offset Partners and products at the time of signing of contracts. We have also re-instated Services as an avenue of discharging offsets”.

“The Standard Operating Procedure for issue of export authorizations has been simplified and put in public domain”.

“The requirement of Government-signed End User Certificate for export of parts and components and other non-sensitive military stores, sub-assemblies, and sub-systems has been done away with”.

Prime Minister Modi said that it was BJP Government, which had opened the defence sector for Private Industry in year 2001.

“The defence industry sector was closed to the private sector till May 2001, when it was first opened up to private sector participation by the Government of Shri Atal Behari Vajpayee ji”, he said at DefExpo inaugural, which saw a huge turnout.

“We have taken a step forward and revised the Foreign Direct Investment cap of 26 percent to 49 percent through the automatic route, and even up to 100 percent on a case-to-case basis”.

The Defence Procurement Procedure has also been revised, with many specific provisions for stimulating the growth of domestic defence industry.

“We have also de-notified some items earlier made exclusively by Ordnance Factories, so that the private sector, especially the micro, small and medium enterprises can enter this space”.

“For encouraging the development of Micro and Small enterprises in the defence sector, the Public Procurement Policy for Micro and Small Enterprises– which was notified in 2012 – has been made mandatory from April 2015”.

“And we have seen some encouraging initial results.In May 2014, the total number of defence licenses issued stood at 215. In less than four years, we have issued 144 more licenses through a much more transparent and predictable process”.

Prime Minister Modi presented figures to showcase the contrast between his Government and the previous Congress Government without naming Congress.

“In May 2014, the total number of defence export permissions granted stood at 118, for a total value of 577 million dollars. In less than four years, we have issued 794 more export permissions, for a total value of over 1.3 billion dollars.From 2007 to 2013, the targeted offsets obligations were 1.24 billion dollars, of which only 0.79 billion dollarsworth of offsets were actually discharged. That is, an achievement rate of only about 63 percent”.

Prime Minister also clarified that under his Government offset was realized in real sense substantially.

“From 2014 to 2017, the targeted offsets obligations were 1.79 billion dollars, of which 1.42 billion dollars worth of offsets were realized. This is an achievement rate of close to 80 percent. Procurement from Micro and Small Enterprises by the Defence Public Sector Undertakings and Ordnance Factories has gone up from about Rs. 3300 crores in 2014-15 to over Rs. 4250 crores in 2016-17. This is an increase of close to 30 percent”.

“It is heartening to note that the contribution of small and medium scale sector to defence production has grown by 200 percent in the last 4 years”.

Modi Government in order to give a fillip to Indian Defence Industry made out the provision of ‘Strategic Partner’, which allows a foreign OEM to tie up with Indian Industry and build defence equipment in India.

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