MoD spells out five-point plan for raising annual defence production

Defence Minister Rajnath Singh at the Society of Indian Defence Manufacturers Annual Session 2019 in New Delhi, on Tuesday photo:pti
Defence Minister Rajnath Singh and his officials, addressing a defence industry gathering in New Delhi on Tuesday, spelt out a five-point plan for raising India’s annual defence production from Rs 80,000 crore currently to Rs 1.82 trillion ($26 billion) by 2025.


“For this, the Indian defence industry needs to grow at the rate of 15 per cent per annum,” said Singh.


With growth likely to come mainly from the private sector, Singh revealed that of the current annual arms production of Rs 80,000 crore, the private industry currently accounts for Rs 16,000 crore. Besides, the public sector outsources about 40 per cent of its production to private firms.


With the defence budget limited in how much it could spend, the defence minister underlined export as a major driver. Over the last five years, defence exports have witnessed a substantial rise, reaching Rs 10,745 crore ($1.5 billion) last year. The Defence Production Policy (DPrP) sets an annual target of $5 billion by 2025.  The defence minister also stated that his ministry’s new “end-to-end online offset processing portal” has facilitated offsets to the tune of $ 1.5 billion.


Sanjay Jaju, joint Secretary in the defence ministry, spelt out the government’s proposed five-point action plan for achieving the DPrP’s ambitious targets. “This will be a public document. We have already carried out consultations with the industry,” he said.


The first point is a focus on developing entrepreneurs and empowering them to take risks. The ministry’s “Innovations for Defence Excellence (iDEX)” initiative is a key driver, with 44 start-ups moving towards production. “We must move from a production mindset to the generation of intellectual property,” said Jaju.


The second driver will be a focus on cutting-edge technologies, such as artificial intelligence, drones and related products. The third driver is the new liberalised business eco-system, which is being transformed by reforms like GST. “India now has a one-country, one-tax environment. This creates huge opportunities for improving our supply chains and logistics," said Jaju.


The fourth reform is the new openness among policymakers towards the defence industry, enhancing feedback and the ease of doing business. Finally, there is a drive to create the skillsets needed to produce new products, services, and technologies. Singh also underlined that the Defence Research and Development Organisation  (DRDO) would act as a technology engine for the private sector. “The government is working on a new policy to facilitate transfer of technologies (ToT) developed by the DRDO,” he said.

He said the DRDO has signed more than 900 technology transfer agreements with the industry so far.  


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