PM Modi recently announced the establishment of two defence corridors and set an ambitious defence export target of Rs 35,000 crore by 2025. The Ministry of Defence (MoD) is gearing up to address the challenges and fine tune the policies that provide impetus to defence production in India. Manish Kumar Jha caught up with Ajay Kumar, Secretary, Department of Defence Production, MoD to an overview on the new initiatives at DDP.
The Draft Defence Production (DDP) Policy 2018 envisions India as one of the world’s top 5 defence producers by 2025. It also sets a defence export target of Rs 35,000 crore ($5 billion) by 2025. How realistic is the vision?
The value of production from OFB (Ordnance Factories Board) and DPSUs (Defence Public Sector Undertakings) put together is currently approximately Rs 55,000 crore ($8 billion). Nearly 65 per cent of the parts/components/subsystems have been delicensed and as a rough estimate, approximately $3 billion worth of defence items are being manufactured in the private sector. Thus, presently defence production would stand at around $11 billion.
This policy envisages adding another $14 billion worth of production in seven years, which translates to CAGR of 15 per cent approximately. With the opening up of the sector and the thrust being given to the private sector, DDP believes that these numbers are attainable.
The DDP policy is expected to spur private investments in defence sector. Elaborate measures have also been proposed for export promotion. The targets are kept on the higher side as moderate ‘incrementalism’ will not have the desired effect.
The announcement of two Defence Industrial Corridors presupposes a robust ecosystem of defence manufacturing by Indian and foreign OEMs. Can you apprise us of the development? How much does the government plan to invest?
This story is from the August 18, 2018 edition of Businessworld.
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This story is from the August 18, 2018 edition of Businessworld.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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