Import embargo on 101 defence items would encourage self-reliance: PM Modi

Prime Minister Narendra Modi said on Monday that the government’s announcement last August of a “negative list”, consisting of 101 defence items embargoed progressively for import, was actually a “positive list” under the Aatmanirbhar Bharat (self-sufficient India) programme.

“This is a positive list that will increase our manufacturing capacities, generate new employment, reduce dependence on imports, and will give a guarantee to the products being manufactured in India to be consumed in India,” Modi said.

The PM was addressing a webinar the Ministry of Defence (MoD) organised in partnership with major industry chambers in the backdrop of a Rs 21,327 crore increase in the defence capex allocation for the year 2021-22.

The MoD has billed this as a “historic” 18.75 per cent increase in capex allocation. However, if the figure is compared with the current year’s revised estimates, the increase is a notional Rs 550 crore.

Modi underscored the opportunities the government has created for the private sector by bifurcating the capital procurement budget into separate domestic and foreign procurement routes. This had been done in order to reserve a significant portion of the defence capital budget for domestic procurement.

“MoD has planned to invest about 53 per cent of the outlay for financial year 2021-22 on domestic procurement. That is about Rs 70,221 crore for domestic defence procurement during 2021-22,” Defence Minister Rajnath Singh said.

Private sector leaders, however, were apprehensive that the defence public sector undertakings (DPSUs) would capture most of the indigenous capital procurement. Baba Kalyani, head of Bharat Forge, pitched for transparency in the share of DPSUs vis-à-vis the private sector. 

Mahindra Group’s S P Shukla pitched for raising the private sector’s share of capex to at least 15 per cent in 2021-22 and to 25 per cent by 2023–24.

Singh said that indigenous design and development was being promoted by according the highest priority to acquisitions under the “Buy (Indian — Indian Designed, Developed and Manufactured)” procurement category.

“During the current financial year, Rs 75,000 crore worth of Acceptance of Necessity (AoN) have been accorded out of which 87 per cent relate to Make in India acquisitions,” said Singh.

Addressing the defence industry’s concerns about prolonged procurement time frames, he said: “MoD is also working on bringing down the delays in timelines of capital acquisition. We will make efforts to complete defence acquisitions within two years instead of the existing three-four years being taken on the average.”

Referring to the embargo on the import of defence equipment, Rajnath said the Negative List of 101 items “provides a long-term visibility on defence procurement plans”.

“We now intend to notify the next list of items… The embargo on imports is planned to be progressively implemented between 2020 to 2024,” said the defence minister.

Chief of Defence Staff General Bipin Rawat said the military was willing to accept indigenous items, as long as they were operationally viable. It was not necessary that the items should be on the Negative List.

Shukla, of Mahindra Group, urged the MoD to initiate at least 10 procurements in the bracket of Rs 500-Rs 2,000 crore each in FY22 to energise the domestic defence manufacturing.