Draft Defence Production Policy, 2018

Why in news?

Ministry of Defence has released a new Draft Defence Production Policy (DProP), 2018.

What are the aims of DProP, 2018?

• The DProP 2018 has embarked on an ambitious journey to mark India’s position among the top defence production countries in the world.
• The DProP 2018 is focused on self-reliance.
• It seeks to change India's position from being the largest importer of arms in the world.

What is the plan under DProP?

• Indigenous Defence production - The policy targets 2025 for becoming self-reliant in 13 weapons platforms.
• It includes fighter aircraft, warships, tanks, missiles and artillery, which constitute the bulk of India’s imports.

• PPP Model -The policy attempts for increased productivity and innovation.
• It thus calls for increased participation of MSMEs, start-ups and other players from the private sector in the defence industry.
• Liberal Policies -The policy would liberalise licences that will be provided to defence industries.
• Also, the requirements for renewal of licences will be pruned.
• The companies with a good track record will be given favourable consideration.
• The policy also liberalises the FDI regime in the defence sector.
• Skill Development - It aims at advancing and boosting the existing public sector defence production units.
• This is particularly aimed to be achieved through skill development and overall program management.
• Overseas Production - The recent policy aims at fusing together technologies from Ordnance Factory Board, Defence Public Sector Undertaking and private players.
• For this, the policy plans on setting up Defence Export Organisation in partnership with the industry.
• This will facilitate for overseas marketing of domestically produced goods.

What are the expected outcomes of the policy?

• If properly implemented the policy will reduce the import bill.
• It could increase the export earnings up to Rs 1,70,000 crore by creating employment for more than 3 million people.
• This will make India a top destination for Research & Development (R&D) in the world.
• It can promote India as a hub for defence related Intellectual Property (IP).
• The broad policy will accelerate domestic defence production and thereby makes it feasible to have a market of our own.
• Indigenous defence production will attract more investors which eventually will lead to massive market creation.

What are the challenges ahead?

• Realising the aims demands difficult changes.
• E.g. the military will have to abandon its insistence on imported, state-of-the-art weaponry.
• Several categories listed for complete indigenisation are already available.
• However the military has traditionally insisted on inducting into service only cutting-edge, fully proven weaponry.
• There is a need for an overarching infrastructural, fiscal and legal environment, and essential testing and validating facilities that individual firms cannot cost-effectively create.
• The policy involves multiple ministries which could delay the establishment of defence production ecosystem within an optimistic time frame.

Source: Financial Express, Business Standard