Make in India has been the mantra of the government ever since it came to power last year. Lot of stress is laid on domestic manufacturing in the defence sector. To increase this element a website has been launched – www.makeinindiadefence.com.
India was the largest importer of defence goods last year. Almost 70% of our requirements are met through imports. Indian Navy has 48 ships on order at present. Our defence needs are looked after by PSUs and Ordnance board. The defence procurement policy is based on “offsets” which is not much attractive. At present there is 49% FDI allowed under automatic route in Defence. Beyond that, FIPB approval is needed. Big bang reforms in FDI have not yet come in the defence sector.
The defence procurement policy should be such that orders should be quicker and procedures for clearance should be transparent. PSUs should be made autonomous and efficient. Countries like China and Japan grew in defence sector with the help of foreign investments. Similarly, if the policy is conducive and there are sure orders, there are potential private players like Mahindra, Reliance, L&T, Adani etc. who are looking for a partner who can put in 49% share. The previous govt has witnessed mistrust between the private players and the bureaucracy, which is now reduced.
The small and medium manufacturing sector doesn’t have the money to enter defence industry. But they have got technology. It is expected that the new defence procurement policy, to be announced by January end next year, will give a percentage of big orders to small and medium enterprises.
Few initiatives already started under Make in India
- SAIL has made all the steel required for the Navy
- Bharat Electronics has made SONARS for the Navy
- Arihant submarine, which is 65-70% indigenous
- 48 ships on order for Navy
- Light Combat Aircraft (LCA)
In the next 10-15 years $200 billion is being planned to invest in defence sector.