Draft Defence Production And Export Promotion Policy – 2020

  • On 3rd August, 2020, the Ministry of Defence (MoD) released a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020).

Goals and Objectives

  • 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.
  • 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.
  • To reduce dependence on imports and take forward "Make in India" initiatives through domestic design and development.
  • To promote export of defence products and become part of the global defence value chains.
  • To create an environment that encourages R&D, rewards innovation, creates Indian IP ownership and promotes a robust and self-reliant defence industry.

Major Highlights

Procurement Reforms

  • 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.
  • Project Management Unit (PMU), with representation from the Services, would be set up to support the acquisition process and facilitate management of the contracts. This setup would bring in expertise to the process of acquisition as well as create focus and synergy in building military
  • 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 various major systems like Armoured Vehicles, Submarines, Fighter Aircraft, Helicopters, Radars with the major industries in the country

Indigenization and Support to Msmes/Start-ups

  • The indigenisation policy 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.

Optimize Resource Allocation

  • The share of domestic procurement in overall Defence procurement is about 60 percent.
  • In order to enhance procurement from domestic industry, it is incumbent that procurement is doubled from the current Rs 70,000 crore to Rs 1,40,000 crore by 2025.

Investment Promotion, FDI and Ease of Doing Business

  • India is emerging as an attractive investment destination.
  • The improvement in market size, demographic dividend and availability of diverse skill sets are evident from India's ranking in the World Bank’s ‘Ease of Doing Business’ (EoDB) report.
  • Defence being a monopsony, investments in this sector is incumbent on regular supply of orders.
  • India is already a large aerospace market with rising passenger traffic and increasing military expenditure, as a result of which the demand for aircrafts (fixed and rotary wings) is increasing.

Innovation and R&D

  • By harnessing the nationwide R&D capabilities, future requirements of the services could be met and critical gaps in related technologies would get addressed.
  • Innovations for Defence Excellence (iDEX) has been operationalized to provide necessary incubation and infrastructure support to the start-ups in defence area.
  • Mission RakshaGyan Shakti was launched to promote greater culture of innovation and technology development and to file greater number of patents in Defence PSUs and Ordnance Factory Board (OFB).

Quality Assurance and Testing Infrastructure

  • The entire process of quality assurance and its time bound delivery would be rationalized and monitored by developing an IT platform withan industry interface.
  • For the MSMEs to be more quality conscious, ‘Zero Defect Zero Effect’is being encouraged. This would help industry to adopt Self Certification and Green Channel route through a process facilitated by DGQA/DGAQA.
  • Efforts would be made to create testing infrastructure through DefenceTesting Infrastructure Scheme (DTIS) by providing assistance to industry to set up common testing facilities.

Export Promotion

  • Defence Attachés have been mandated and are supported to promote export of indigenous defence equipment abroad.
  • Export Promotion Cell set up to promote Defence exports through coordinated action to support the Industry would be further strengthened and professionalized.
  • The end-to-end export clearance process in the Department of Defence Production would be further upgraded to make the process seamless and time-bound.
  • Open General Export License (OGEL) regime would be utilized to encourage export of selected defence equipment/items to identified friendly countries.

Way Forward

  • 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 under ‘Atmanirbhar Bharat Package’.