Defence manufacturing: Steps for Increasing Private Sector Participation
Defence manufacturing: Steps for Increasing Private Sector Participation
Question: Defence manufacturing is one of the main sectors among 25 identified for the Make in India campaign launched by GoI. Discuss the steps taken by the government to boost private sector participation in this sector.
- Defence manufacturing is one of the chief sectors under the Make in India campaign launched by GoI
- Numerous initiatives have been taken by the Centre to incentivise private sector which are as follows:
- Foreign OEMs have been formulated to engage in civil and defence aerospace sector
- Series of consultations have been put forth across ministries and departments to enable rule and procedural simplification to ensure private sector participation
- This will stimulate investments in a massive way
- Private sector has also been asking for parity between domestic players and ordinance factory board as well as defence PSUs for payment of Central Excise and Customs Duty; this has been accomplished
- GoI has also withdrawn excise and customs duty exemptions currently available for goods manufactured and supplied to Ministry of Defence by Ordinance Factory board and Defence PSUs
- The strategic advantage of PSUs has been removed and demands of foreign Original Equipment Manufacturers/OEMs such as Lockheed Martin, Airbus and Boeing have been met; they are actively exploring scope of future investments in India
Facts and Stats
- Indian aerospace and defence market is the most attractive as India is the largest importer of defence items in the world
- GoI has systematically opened this sector of defence manufacturing for private investment through rationalisation of conditions and increase in FDI cap in defence to 49%
- Around 60% of the items needed for industrial license have been de-reserved Business re-engineering process has been effected across departments and ministries for favourable manufacturing and export platform for private sector firms
