Proposed MoD policy aims to double India's defence production in 5 years

The draft policy proposes creating a technology assessment cell, with representation from the three Services
Combining multiple announcements (that) were made under Atmanirbhar Bharat package into a single policy document, the Ministry of Defence (MoD) on Monday released a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020) for public consultation and comments.

“DPEPP 2020 is positioned as MoD’s overarching guiding document to provide a focused, structured, and significant thrust to defence production capabilities of the country for self-reliance and exports,” states the draft policy.

Mirroring the draft Defence Production Policy 2018 (DPrP 2018), which was never finalised, the DPEPP 2020 sets out the target: “To achieve a turnover of Rs 1.75 trillion ($25 billion,) including export of Rs 35,000 crore ($5 billion) in aerospace and defence goods and services by 2025.”

This requires India’s aerospace and defence industry to more than double in size over the coming five years, “from the current Rs 70,000 crore to Rs 1.4 trillion by 2025”.

 Elsewhere in the draft policy, the size of India’s defence industry is estimated to be Rs 80,000 crore. “While the contribution of the public sector is estimated to be Rs 63,000 crore, the share of private sector has steadily grown to Rs 17,000 crore over the years,” states the draft DPEPP 2020.

The new policy backtracks significantly from the draft DPrP 2018, which aimed at catapulting India into the world’s top five defence producers.

The draft DPrP 2018 had stipulated 13 technology realms where India would achieve self-reliance by 2025, including in building fighter aircraft, helicopters, warships, tanks, missile systems, gun systems, small arms, and ammunition.

Instead of this ambitious goal, the draft DPEPP 2020 echoes the recently issued draft Defence Acquisition Policy 2020 (DAP 2020) in stating: “A negative list of weapons/platforms would be notified with year-wise timelines for placing an embargo on import of such items from those dates.”

Providing further flexibility for import, the draft policy states: “This list would be updated periodically, without compromising on the operational requirements of the services.”

The new policy states the “aim is to move away from licensed production to design, develop, and produce defence equipment, so that the nation owns the design rights and intellectual property of the systems.”

To identify systems and platforms that are ripe for indigenisation, the policy proposes creating a Technology Assessment Cell, with representation from the three services, to “assess the industrial capability for design, development, and production, including re-engineering, for production of various major systems like armoured vehicles, submarines, fighter aircraft, helicopters, radars, with the major industries in the country”.

The draft DPEPP 2020 proposes categorising major defence industries into two types: “Systems integrators with design, development, production, testing, and certification capability and ability to develop and sustain the ecosystem required for the next 25-30 years.”

The second category is of systems integrators who lack design and development capability, but are capable of partnering the Defence R&D Organisation in developing and manufacturing equipment.

Mapping out the landscape for the private sector, the draft policy states: “In the private sector, many engineering majors have diversified and joined the defence sector. More than 460 licences have so far been issued to private companies for production of defence equipment. The defence industry is ably supported by a strong base of over 8,000 micro, small and medium enterprises (MSMEs) that provide strength and vibrancy to the defence supply chain.”

To support MSMEs and start-ups, the MoD will create an indigenisation ecosystem that will transfer the production of imported components and sub-assemblies into India. “Five-thousand such items are proposed to be indigenised by 2025,” states the draft policy.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel