A spur for industry recovery, says Dr Reddy
The defence industry is looking forward to more items being added progressively to the embargo list so as to deepen the process of indigenisation by leveraging the capabilities of manufacturers.
FICCI President Dr Sangita Reddy echoed these sentiments of the defence industry as she welcomed the announcement of the list of 101 items embargoed for imports in the defence sector starting December 2020.
The decision to introduce an import embargo on at least 101 items signals the Government’s resolve to push forward the ‘VocalforLocal’ campaign.
Manufacture and production of high technology weapon systems like artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, LCHs, radars etc. in India will have cascading benefits to upstream industries, especially the MSMEs.
While liberalisation of the sector has allowed several MSMEs to enter the market, the lack of demand from the Indian Government, the sole customer for the Indian industry, has meant the sector is yet to realise its full potential.
“The current announcements will spur industry recovery and lead to spin-off benefits such as increased research and development, employment generation, corridor development, etc., which will go a long way in strengthening the Defence Industrial base of the country,” said Dr Reddy.
The announcement to earmark Rs.52,000 crore for domestic capital procurement fulfils a longstanding recommendation made by the FICCI Defence Committee to provide long-term visibility on defence procurement plans. The industry can now plan its CAPEX and production capacity, according to S P Shukla, Chair, FICCI Defence Committee and Group President, Aerospace & Defence and Member – Group Executive Board of the Mahindra Group.
The announced policy measures will provide themuch-needed impetus to make India ‘AtmaNirbhar’ in defence technology and products, said FICCI on 9 Aug 2020.
The Defence Ministry has issued a list of 101 items for which there would be an embargo on the import beyond the timeline indicated against them.
This is a big step towards self-reliance in defence, the Ministry said on 9 August 2020.
It also offers a great opportunity to the Indian defence industry to rise to the occasion to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by Defence Research and Development Organisation (DRDO) to meet the requirements of the Armed Forces in the coming years.
The list is prepared by MoD after several rounds of consultations with all stakeholders, including Army, Air Force, Navy, DRDO, Defence Public Sector Undertakings (DPSUs), Ordnance Factory Board (OFB) and private industry to assess current and future capabilities of the Indian industry for manufacturing various ammunition/weapons/platforms/equipment within India.
Almost 260 schemes of such items were contracted by the Tri-Services at an approximate cost of Rs 3.5 lakh crore between April 2015 and August 2020. With latest embargo on import of 101 items, it is estimated that contracts worth almost Rs four lakh crore will be placed upon the domestic industry within the next five to seven years. Of these, items worth almost Rs 1,30,000 crore each are anticipated for the Army and the Air Force while items worth almost Rs 1,40,000 crore are anticipated by the Navy over the same period.
The list of 101 embargoed items comprises of not just simple parts but also some high technology weapon systems like artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, light combat helicopters (LCHs), radars and many other items to fulfil the needs of our Defence Services. The list also includes, wheeled armoured fighting vehicles (AFVs) with indicative import embargo date of December 2021, of which the Army is expected to contract almost 200 at an approximate cost of over Rs.5,000 crore.
Similarly, the Navy is likely to place demands for submarines with an indicative import embargo date of December 2021, of which it expects to contract about six at an approximate cost of almost Rs.42,000 crore. For the Air Force, it is decided to enlist the light combat aircraft LCA MK 1A with an indicative embargo date of December 2020.
Of these, 123 are anticipated at an approximate cost of over Rs.85,000 crore. Hence, there are highly complex platforms that are included in the list of 101 items, of which details of three examples are given above.
The embargo on imports is planned to be progressively implemented between 2020 to 2024. The aim behind the promulgation of the list is to appraise the Indian defence industry about the anticipated requirements of the Armed Forces so that they are better prepared to realise the goal of indigenisation.
The MoD has adopted many progressive measures to encourage and facilitate ‘Ease of Doing Business’ by the defence Production entities.
All necessary steps would be taken to ensure that timelines for production of equipment as per the Negative Import List are met, which will include a co-ordinated mechanism for handholding of the industry by the Defence Services.
More such equipment for import embargo would be identified progressively by the DMA in consultation with all stakeholders.
A due note of this will also be made in the Defence Acquisition Procedure (DAP) to ensure that no item in the negative list is processed for import in the future.
In another relevant step, the MoD has bifurcated the capital procurement budget for 2020-21 between domestic and foreign capital procurement routes.
A separate budget head has been created with an outlay of nearly Rs.52,000 crore for domestic capital procurement in the current financial year. #defence #manufacturing #makeinindia #imports #exports /fiinews.com
