Defence policy changes showing positive results, says PM Modi at DefExpo

The government has also de-notified some items earlier made exclusively by Ordnance Factories, so that private sector, especially the MSME can enter this space

The defence policy changes that the current NDA government initiated after coming to power is now showing the result as the total value of defence export permission has doubled, said Prime Minister Narendra Modi while addressing the 10th edition of Defence Expo held at Thiruvidanthai in Kancheepuram near Chennai.

"Over the last few years, we have made a humble beginning. On defence manufacturing licenses, on defence offsets, on defence exports clearances, on Foreign Direct Investment in defence manufacturing, and on reforming our defence procurement, we have taken many steps," he said.

The Defence Procurement Procedure has been revised with many specific provisions for stimulating the growth of domestic defence industry. The government has also de-notified some items earlier made exclusively by Ordnance Factories, so that private sector, especially the Micro Small and Medium Enterprises (MSME) can enter this space.

"We have seen some encouraging initial results. In May 2014, the total number of defence license issued stood at 215, in less than four years, we have issued 144 more licenses through a much more transparent and predictable process. The total number of defence export permission granted stood at 118, for a total value of $ 577 million. In less than four years, we have issued 794 more export permissions, for a total value of over $ 1.3 billion," he said.

From 2007 to 2013, the targeted offset obligations were $ 1.24 bn of which only $0.79 billion worth of offset were actually discharged. That is an achievement rate of only about 63 per cent, while from 2014 to 2017, the targeted offset obligations were $1.79 billion of which $1.42 billion worth of offset were realised, which was an achievement rate of close to 80 per cent. 

Procurement from micro and small entreprises by the defence public sector undertakings and ordinance factories has gone up from about Rs 33 billion in 2014-15 to over Rs 42.5 billion in 2016-17, which is an increase of close to 30 per cent. And 30 per cent in four years.

"It is heartening to note that the contribution of MSME to the defence production has gone up by 200 per cent in the last four years. They are also increasingly becoming part of the global supply chain. The share of Indian vendors in the procurement orders placed to defence capital expenditure has grown up from about 50 per cent during 2011-14 to over 60 per cent during the last three years. This will improve further in the years ahead,' he elaborated. 

The government is ready to take all steps required to equip the Armed Forces, including through the establishment of a strategically independent defence industrial complex, which is not a simple task. The government is establishing two Defence Industrial Corridors, one in Tamil Nadu and another in Uttar Pradesh. These will utilize defence manufacturing ecosystems in the regions and further build upon it. The corridors will become engines of economic development & growth of defence industrial base.

India's defence preparedness is guided by the thoughts of the great Indian thinker and strategist Kautilya that the king or the ruler must protect his people and that peace is preferable to war.

The government has launched an ‘Innovation for Defence Excellence’ scheme to set up Defence Innovation Hubs throughout the country to provide necessary incubation and infrastructure support to the start-ups in the defence sector. He said that the Private Equity, Venture Capital investment into defence sector, particular start-ups, will be encouraged.

Taking a dig at the previous Congress-led government, he said that there was a time when the critical issue of defence preparedness was hampered by policy paralysis. 

"We have seen the damage such laziness, incompetence or perhaps some hidden motives can cause to the nation. Not now, Not anymore, Never again," he added.

He alleged that the issue of providing bullet-proof jackets to Indian soldiers was kept hanging for years and the present government has brought the process to a successful conclusion with a contract that will provide a boost to defence manufacturing in India.

Similarly, the long-drawn process of procurement of fighter aircraft that never reached any conclusion. This government has not only taken bold action to meet the immediate critical requirements but has also initiated a new process to procure 110 fighter aircraft, he added. 

"We do not want to spend years in discussion without any tangible outcomes," he maintained.