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Draft Defence Production and Export Promotion Policy 2020 (6 August 2020)

Draft Defence Production and Export Promotion Policy 2020 (6 August 2020)

Why in News:

Draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020) release recently by the Ministry of Defence. 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.

Background:

The government identified 12 military platforms and weapons systems for production in India to achieve the aim of "self-reliance".

They are fighter aircraft, medium lift and utility helicopters, warships, land combat vehicles, missile systems, gun systems, small arms, ammunition and explosives, surveillance systems, electronic warfare (EW) systems and night fighting enablers, among others.

The policy says the goal is to achieve a turnover of Rs 1,70,000 crore in defence goods and services by 2025 involving additional investment of nearly Rs 70,000 crore, creating employment for nearly 2 to 3 million people.

The Department of Defence Production would be the nodal department for coordination on various components of the Defence Production & Export Promotion Policy (DPEPP) 2020.

Salient Features of DPEPP 2020:

There are certain thrust areas which the policy looks at:

  • Talking about the procurement reforms: Defence procurement is bugged with a lot of ills first of all time delays. A procurement which takes 36 to 48 months can go 5 to 6 years and also there are too many stages of approval, too many over centralisation, the new policy addresses that.
  • Promotion policy: It says that whatever we can produce in our country should not be imported, for that the promotion policy talks about making a negative import list not only of today but also in the time perspective that what we can do and make in our country should not be imported at all.
  • Project management unit: To sort out the procurement delay it aims to setup a project management unit i.e. managing the procurement process more efficiently and to facilitate the acquisition process properly.
  • Technical assessment cell: It talks about the establishment of a technical assessment cell which will actually take account of the technology readiness level which is available and classify various industry player according to their capability, the one which can do design development, production, testing and certification to be independent players, where as the one who can do only development can only be the partners with DRDO.
  • Indigenisation and support to MSMEs: It has a policy of indigenisation of 5000 items by 2025. It also talks about support to MSME s in a large way, for this it has setup Defence investor cell.
  • Optimisation of Resource allocation: It says to have distinct budget only for domestic capital procurement. It also aims to enhance domestic production by 15 per cent in each year or the next 5 years.
  • Scrutinising defence expenditure: It talks about scrutinising defence expenditure under various heads so that it does not have less priority items taking a spike or major chunk of the budget whereas a lesser priority items could not move up the procurement cycle.
  • Investment promotion, FDI and Ease of doing business: In investment promotion, India has got a lot of things going in the aircraft area, in engines area, in UAV domain, line-replaceable unit (LRU), etc, in this area India have Tejas and so many things coming up.

                              

Ground Implementation of the Policy:

  • There are lots of impediments in implementation.
  • Attitudinal roadblock: The MoD and the other stakeholders has to realize the capability of Private sectors and their role in K9- Vajra, M77, etc. It is a private sector who is leading on international forum and winning contracts.
  • There should be an institutional forum for feedback to the MoD.
  • Efforts must be made to encourage Research and Development (R & D), rewards innovation and creating Indian IP ownership.
  • There is need to promote a robust and self-reliant defence industry.

Important points made by the Guests

Laxman Kumar Behera, Research Fellow, MPIDSA

  • This DPEPP was in the making in fact in 2018, Ministry of defence (MoD) came out with policy because the first defence production policy was announced in 2011 and that was not that effective.
  • So, the Ministry was working over the years and after the Make in India was announced and after Prime Minister’s vocal for local call and “Aatmnirbhar Bharat Abhiyan”, the MoD activated all his departments and stakeholders and they have put together all the ideas in one document.
  • The good part of the document is its clear objective, it has identified five objectives and to achieve those objective it clearly laid down the focus area like procurement reforms, indigenisation and support to MSMEs, optimisation of resource allocation, etc. It also talks about innovation and R & D.
  • It also talks about the reform of the state owned entities particularly the Ordnance Factory Board (OFB) and the Defence Public Sector Undertakings (DPSUs). So, the government is already declared that the OFB, which is an enormous organisation to corporatize it.
  • Another aspect is overall quality assurance agencies, because we don’t have the right agency to certify the designed equipments in a time bound manner and it is often very frustrating for the developers or the producers to go through the lengthy process of trial and testing and those time are more than the developmental time. So, this production policy talks about simplifying those issues.
  • But major part is the export promotion that is how to promote India’s defence export. So, there is target now we are at the level of around 10,000 crore to 11,000 crore, now to increase by 3 times, which is around 30,000 cr to 35,000 cr.
  • There are number of steps that government have articulated that is, all the Indian defence attaché which are posted on the mission, they will be co-opted and their assistance will be taken for consideration in Indian export.
  • The draft policy also talks about government to government kind of exports.
  • The government can provide export credits to some of the countries which don’t have enough money to buy.
  • Export authorisation mechanism will also be simplified.
  • The policy is backed by strategy, so there are 9 key steps that the policy lays down. This thing will be done by various stakeholders to achieve the larger objective.

Lt. Gen. (Dr) VK Saxena (Retd), Distinguished Fellow, VIF

  • It is a new document and supposed to be overarching document which is an output of ‘AatmNirbhar Bharat’. It is meant to give focused, structured and significant inputs and control various elements and guide various elements related to defence production and export promotion.
  • This document has a very wide coverage. The indigenisation in this document is not easy task to do.
  • In 2018-19, the total turnover in manufacturing for the Public sector was 8 billion and for private sector 2.84 billion and today export is 1.5 billion and to take them to $25 billion a very big target.
  • With the indigenisation, there has to be approached from the DPSUs and the OFB to go ahead and ask the private industries to take part in the indigenisation process.

Ajay Banerjee, Defence Correspondent, The Tribune

  • The policy now aims to have an export of RS 35,000 crore by 2020. It may be possible because lots of our neighbouring countries are friends and they want equipment from India because it is reliable and cheaper.
  • The export promotion policy and Make in India is an export hub for the global supply chain is the most important aspect of this policy. This will bring in jobs; this will bring in exports and also raise India’s stature.
  • It aims to have $25 billion by 2025 and not just the PSEs, the private investor are also allowed, so the private sector will also contribute in this $25 billion investment to achieve the target by 2025.

  

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