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Defence production hit record high of nearly ₹1.27 lakh crore in 2023-24: Defence Ministry

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Defence production hit record high of nearly ₹1.27 lakh crore in 2023-24: Defence Ministry

  • In a significant development reported by The Hindu, India's defence production for the financial year 2023-24 has reached a historic high of ₹1,26,887 crore. This marks a notable increase of 16.7% from the previous year's ₹1,08,684 crore, according to the Ministry of Defence. This surge underscores India's ongoing efforts towards bolstering indigenous defence manufacturing capabilities, reducing dependency on foreign imports, and enhancing self-reliance in the defence sector.

Background of Defence Production in India:

Early Recognition of Need (1950s-1970s):

  • India's focus on indigenisation intensified post the Indo-China war of 1962 and subsequent conflicts.

Integrated Guided Missile Development Programme (IGMDP), 1983:

  • Led by Dr. APJ Abdul Kalam, aimed at developing strategic missile systems; concluded successfully in 2008.

Self-Reliance Index and Abdul Kalam's Initiative (1992):

  • Initiated with a Self-Reliance Index of 0.3, aimed to reach 0.7 by 2005 through strategic planning.

Responsibility Transfer (2000s):

  • Shifted from Department of Defence Production (DDP) to Ordnance Factories Board (OFB) and Services; devised 15-year Perspective Plans for Indigenisation.

Need for Defence Production:

  • India's defence production efforts are driven by several critical imperatives:

India’s Share in Global Arms Market:

  • Accounts for only 0.2% of global arms exports; aims to enhance global footprint.

India as the Largest Importer of Arms:

  • Despite efforts, remains the largest importer globally, with 11% of global arms imports during 2018-22.

Development of Military Industrial Complex:

  • Focus on increasing national military spending; crucial for self-reliance and reducing foreign dependency.

Technology Transfer and Independence:

  • Facilitates critical defence capabilities through technology collaborations and exports.

Exports:

  • Initiatives like Brahmos Cruise Missiles to the Philippines exemplify expanding export capabilities.

Research and Development:

  • Promotes significant R&D investments, fostering a robust defence industrial ecosystem.

Government’s Initiative towards Defence Indigenisation

  • Recent policy measures highlight the government's commitment to indigenous defence manufacturing:
  • Defence Procurement Policy, 2016:
  • Introduced categories like "Buy (Indian-IDDM)" to streamline acquisitions.

Innovations for Defence Excellence (iDEX), 2018:

  • Engages industries, MSMEs, and startups in defence innovation and R&D.

SPRINT Challenges:

  • Introduced by NIIO and DIO to integrate new technologies into the Indian Navy.

Indigenous Manufacturing:

  • Simplification of industrial licensing, liberalising FDI policies, and increasing domestic procurement share.

Defence Industrial Corridors:

  • Established in Uttar Pradesh and Tamil Nadu to boost regional defence hubs.

Positive Indigenisation Lists:

  • Prioritises domestic procurement under the Buy Indian (IDDM) category.

E-Biz Portal:

  • Digitisation of industrial license processes for efficiency.

Custom Duty and FDI Policy:

  • Uniform customs duties and enhanced FDI limits aim to level the playing field.

Vendor Development Guidelines:

  • Guidelines to bolster private sector participation in defence manufacturing.

Defence Acquisition Procedure 2020:

  • Streamlines defence procurement, supports Make in India initiatives.

Recent Rise in Exports of Indian Defence Products

Current Status of Exports and Trend:

  • Exports surged to ₹16,000 crore in FY 2022-23, a significant rise supported by policy reforms.

Export Deals with Countries:

  • Exporting to over 85 countries, including strategic deals with the Philippines for BrahMos missiles.

Reasons for Recent Increase in Exports:

  • Private sector involvement, policy reforms, and simplified export procedures contributed to export growth.

Challenges Faced by Defence Production and Exports:

Lesser Defence Budget and Modernisation:

  • Budget concerns impacting modernisation efforts and preparedness.

Insufficient Infrastructure and Capacity:

  • Despite progress, inadequate infrastructure remains a challenge.

Limited Private Sector Participation:

  • Dominance of DPSUs in defence production; efforts ongoing to increase private sector involvement.

Inadequate Investments in R&D:

  • Long-term success hinges on sustained R&D investments.

Establishment of Economies of Scale:

  • Crucial for enhancing productivity and reducing costs in defence production.

Measures to be Taken in Future:

Strategies to achieve India's defence production and export goals include:

Export High-Value Weapon Systems:

  • Focus on exporting advanced platforms like LCA-Tejas and BrahMos missiles.

Comprehensive Export Deals:

  • Offer integrated solutions including training and maintenance services.

Leverage Defence Lines of Credit (LoC):

  • Extend LoCs to Friendly Foreign Countries to facilitate defence exports.

Enhance Private Sector Contribution:

  • Incentivise and allocate significant projects to private companies.

Establish a Dedicated Export Promotion Body:

  • Coordinate efforts to promote defence exports effectively.

Defence Modernisation Fund:

  • Propose a non-lapsable fund to bridge budget shortfalls in modernisation efforts.

Prelims Takeaway

  • Defence sector – new technologies in news

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