Prime Minister says the 21st century defence sector cannot stand without private sector partnership

About ₹70,000 crore of the capital allocation of ₹1.35 lakh crore in the defence budget would be reserved for domestic procurements and a second negative list of items that could be procured only locally by the Services would be issued, Defence Minister Rajnath Singh said on Monday.

“My Ministry has planned to invest, about 63% of the outlay for 2021-22 on domestic procurement, i.e. about ₹70,221 crore for domestic defence procurement during for 2021-22,” Mr. Singh stated at a webinar organised by the Department of Defence Production and the Society of Indian Defence Manufacturers.

Defence Secretary Ajay Kumar said the new negative list was expected to be issued in March and around 10 mid-sized projects would be given to industry in April. The deal for Light Combat Helicopters was also set to be signed shortly while the deal for Light Utility Helicopters was expected by August 2022.

Addressing the webinar, Prime Minister Narendra Modi said the 21st century defence sector cannot stand without private sector partnership. “I would urge the private sector to come forward with not just manufacturing capabilities but also with design and development,” he said.

In the budgetary allocation for 2021-22, the capital allocation for defence saw an increase of ₹21,326 crore or 18.75% compared to Budget Estimates (BE) of last year. Last year, for the first time, the government introduced a separate allocation for domestic procurement within the defence budget and reserved ₹52,000 crore for 2020-21.

Support To Start-Ups

Mr. Singh announced that to support start-ups, the Ministry planned to channelize about ₹1000 crore during 2021-22 for procurement from start-ups under the Innovation for Defence Excellence (iDEX) initiative.

As part of a series of efforts to streamline defence procurement, Mr. Singh said, the Ministry was working on bringing down the delays in timelines of capital acquisition. “We will make efforts to complete the defence acquisition within 2 years, instead of the existing 3-4 years being taken on the average,” he observed.

Last year, the Defence Ministry notified a list of 101 items on the negative import list and Mr. Singh said they intended to notify the next list of items and request the Secretary, Department of Military Affairs (DMA), that they should also consider including certain spares currently being procured from outside so that could also be indigenised.

“The embargo on imports is planned to be progressively implemented between 2020 to 2024. All necessary steps would be taken to ensure that timelines for production of equipment as per the negative import list are met,” he stated.

Mr. Modi termed the negative list for imports a positive list in the language of self-reliance. “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,” he stated.

Defence Exports

Both Mr. Modi and Mr. Singh stressed on simultaneously boosting defence exports and reducing imports.

“Our initiatives have resulted in a staggering 700% growth in defence exports in the last six years,” Mr. Singh said, adding that India had found a place in the list of top 25 exporters in the world as per data published by Swedish think tank SIPRI in 2020.