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Draft Defence Production and Export Promotion Policy 2020

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Topic: General Studies 2:

• Government and policies in Defence

In News: With the aim of achieving a manufacturing turnover of $25 bn or ₹1,75,000 crore, including exports of $5 bn in aerospace and defence goods and services by 2025, the Ministry of Defence (MoD) has put out a draft ‘Defence Production & Export Promotion Policy (DPEPP) 2020’ for public feedback. The DPEPP 2020 is envisaged as overarching guiding document of MoD to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports. This is a step towards the 'Atmanirbhar Bharat Package'.

• The share of domestic procurement in overall defence procurement is about 60%. In order to enhance procurement from domestic industry, it is incumbent that procurement is doubled from the current ₹70,000 crore to ₹1,40,000 crore by 2025.
• This effort would be supplemented by selected Defence Public Sector Undertakings (DPSU) which would work as export promotion agencies for certain countries with earnings linked to success fee, to promote export of defence products abroad.

Aim: To position India amongst the leading countries of the world in defence and aerospace sectors and the policy is envisaged as overarching guiding document of MoD to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports

Goals and objectives:

1. To achieve a turnover of Rs 1,75,000 Crores (US$ 25Bn) including export of Rs 35,000 Crore (US$ 5 Billion) in Aerospace and Defence goods and services by 2025.
2. To develop a dynamic, robust and competitive Defence industry, including Aerospace and Naval Shipbuilding industry to cater to the needs of Armed forces with quality products.
3. To reduce dependence on imports and take forward "Make in India" initiatives through domestic design and development.
4. To promote export of defence products and become part of the global defence value chains.
5. To create an environment that encourages R&D, rewards innovation, creates Indian IP ownership and promotes a robust and self-reliant defence industry.

The Policy brings out multiple strategies under the following focus areas:

1. Procurement Reforms: Setting up of Project Management Unit and Technology Assessment Cell
2. Indigenization & Support to MSMEs/Startups: Aims to create an industry ecosystem to indigenise the imported components (including alloys and special materials) and sub-assemblies for defence equipment and platforms manufactured in India. 5,000 such items are proposed to be indigenised by 2025.
3. Optimize Resource Allocation: To enhance procurement from domestic industry, the procurement needs to be doubled from the current Rs. 70,000 crore to Rs. 1,40,000 crore by 2025.
4. Investment Promotion, FDI & Ease of Doing Business
5. Innovation and R&D:
   • Innovations for Defence Excellence (iDEX) has been operationalised to provide necessary incubation and infrastructure support to the startups in the defence area. 
   • Mission Raksha Gyan Shakti was launched to promote a greater culture of innovation and technology development and file a higher number of patents in Defence Public Sector Undertakings (DPSUs), Ordinance Factory Board (OFB). It would be scaled up for promoting the creation of Intellectual Property in the sector and its commercial utilisation.
6. DPSUs and OFB
7. Quality Assurance & Testing Infrastructure
8. Export Promotion

Opportunities in aerospace industry

The opportunities in the aerospace industry have been identified in the following segments - aircraft build work, aircraft Maintenance, Repair and Overhaul (MRO), helicopters, engine manufacturing and MRO work, line replaceable units, Unmanned Aerial Vehicles (UAVs) and upgrades and retrofits.

Project Management Unit: Given the long time lines involved in defence procurement a Project Management Unit (PMU) will be set up with representation from the Services for estimation of development and production lead times specifications and technologies involved, life cycle costs and maintenance requirements of platforms, equipment and weapon systems.

Technology Assessment Cell: In addition, with the aim to move away from licensed production to design, develop and produce indigenously and own the design rights and Intellectual Property (IP) of the systems projected in Long Term Integrated Perspective Plan (LTIPP) of the Services a Technology Assessment Cell (TAC) would be created. The TAC would also assess the industrial capability for design, development and production, including re-engineering for production of major systems such as armoured vehicles, submarines, fighter aircraft, helicopters and radars with the major industries in the country, the policy states.

The policy states that a negative list of weapons and platforms will be notified with year-wise time lines for placing an embargo on import of such items from those dates.

Connecting the Dots:

1. Discuss the objectives of Draft Defence Production and Export Promotion Policy 2020.