Defence Ministry to start portal to raise indigenisation from 45% to 75%

Ministry hints at Rs 400 bn opportunity for domestic industry, has notified 77 items under public procurement order the past few weeks, will add another 30 in near future

The Ministry of Defence is planning to launch an indigenisation portal to attract more local manufacturers towards defence component manufacturing, in an effort to make more components in India, said Ajay Kumar, secretary, Department of Defence Production, Ministry of Defence.

The ministry hopes to increase indigenisation from the current 45 per cent to around 70-75 per cent eventually, he added

"Indigenisation is a huge opportunity for the industry. We are currently procuring Rs 800-900 billion worth of capital equipment every year and about Rs 250-300 billion of revenue equipment every year. Out of the total, around Rs 600 billion worth of spares, parts, components and sub assemblies are getting imported every year," Kumar said.

Even if the aim is to manufacture 50-75 per cent of this in India, it is Rs 300-400 billion opportunity.

One of the challenges in indigenisation is the huge diversity. Today, the number of items that need to be indigenised is over 110,000. It is difficult for industry to keep tab on all these items, and to know how many have been notified.

"To make this simple and make information more easily accessible to the indistry, we are in the process of setting up an indigenisation portal," Kumar said.

"The public procurement order is one of the ways to attract private players. We are in the process of announcing that we will notify any component that is required by the defence PSUs and armed forces, and that Indian industry is capable of manufacturing it under the public procurement order. Therefore, it will become mandatory to give preference to Indian manufacturers first," he added.

The ministry has notified 77 items under the public procurement order in the past few weeks and another 30 will be added in near future.

While not everything can not be mandated for 40-60 per cent value addition, the government is suggesting a phased manufacturing approach jn of value addition, which will start with lower basis to give preference and move up the value chain as industry capability increases.

However, without the development of engine technology, material technology and chip technology, indigenisation is difficult. The ministry is looking at ways to institute national programmes in these areas, and promote and set up testing centres for this. It would also launch schemes for dedicated indigenised technology testing.

The government is expecting more engagement with the US and Russia for manufacturing and supplying arms to these countries. The central government is also working very closely with defence and IT firms in the use of artificial intelligence in the defence sector.

In 2017-18, the defence industry had a turnover of Rs 700 billion, of which the defence PSUs accounted for Rs 580 billion and the private industry, Rs 120 billion. Kumar added that the vision in the draft defence policy to achieve Rs 1,700 billion is not ambitious and could be doable at a higher growth rate.