Defence Production and Export Promotion Policy 2020

This article discusses the draft of Defence Production and Export Promotion Policy 2020. It describes the vision, goals and salient features of Defence Production and Export Promotion Policy (DPEPP 2020) and what impact this policy would have on Indian defence sector, other arenas and Indian economy as a whole.

Background

Defence Production and Export Promotion Policy 2020

Vision 

Objectives of DPEPP  (Defence Production and Export Promotion Policy) 2020

Goals of Defence Production and Export Promotion Policy 2020

Focused Areas

Previous Steps in Defence Sector

Achievements of Indian Defence Production

Conclusion

Background

India stands at second position in importing arms in the entire world. It imports tanks, weapons, helicopters, fighter aircrafts, other armed equipments and defence technologies from other countries. These countries are Russia, USA, Israel, France etc. Indian armed forces have cutting edge state of art defence technologies and weapons due to heavy import but there is huge dependence on imports. Such heavy imports of Defence equipments by India have helped economies of our supplier countries. There is a need to bring reforms in Indian defence sector so as to enable it to be self reliant in defence production.

Defence Production and Export Promotion Policy 2020

Defence ministry made the draft of DPEPP 2020 public on 4th August 2020 to meet the demands of Indian armed forces. Ministry also asked for feedback on the draft by 17th August.

Vision 

The vision behind Defence Production and Export Promotion Policy 2020 is to make India amongst the leading countries of world in defence sector including aerospace and naval shipbuilding sectors, from design to production with active participation of public and private sector and thus fulfilling the twin objectives of self reliance and exports.

Objectives of DPEPP  (Defence Production and Export Promotion Policy) 2020

The draft of Defence Production and Export Promotion Policy is designed while keeping in mind the following objectives:

Strategic Purpose 

Need for modernisation of Indian armed forces may be viewed on backdrop of a two sides threat along Chinese and Pakistani borders. While China's expansionist designs have promoted India to boost its capabilities along with Line of Actual Control  (LAC). Pakistan has remained India's adversary, compelling Indian armed forces to constantly adapt to a non-conventional conflict with non state actors.

Reduce Defence Expenditure

With an annual defence budget of USD 70 billion, India is behind only the USA  (USD 372) and China  (USD 261) in terms of military expenditure around the globe. Currently, maximum expenditure of Indian defence sector is done for imports. The purpose of this new policy is to promote exports of defence items by making Indian defence production infrastructure self reliant. It will lead to transformation of defence budget.

Goals of Defence Production and Export Promotion Policy 2020

The specific goals of DPEPP 2020 are mentioned below:

1. To achieve turnover of Rs 1.75 lakh crore in defence manufacturing in next five years or by 2025
2. To achieve the target of exports worth Rs 35,000 crore in aerospace sector and defence sector by 2025
3. To promote local participation in defence production
4. Policy suggests to promote exports of defence products under government's flagship "Make in India Programme". It aims to reduce need for imports and push "Make in India" initiatives through domestic design and development.
5. Defence Production and Export Promotion Policy 2020 complements the governments' ambitious aim of making India an economy of USD 5 trillion.
6. DPEPP 2020 focuses on support to MSMEs / startups, optimization of resource allocation, ease of doing business, FDI investment promotion, R&D and export promotion.
7. Overall Defence Production and Export Promotion Policy 2020 is a focused, structured and significant push to defence production capabilities to become self reliant in defence technologies, weapon systems,  their manufacturing and export. 

Focused Areas

Defence Production and Export Promotion Policy 2020 focuses on following areas:

1. Procurement reforms
2. Indigenization and support to MSMEs/Startups
3. Optimization of resource allocation
4. Investment promotion, FDI and ease of doing business
5. R&D, innovation
6. Setting guidelines for DPSUs (Defence Public Sector Undertakings) and ODD  (Ordinance Factory Board)
7. Quality assurance and testing infrastructure
8. Export promotion

Previous Steps in Defence Sector

Indian government has already taken some steps in recent past in the direction of promoting defence production and export.

1. In February 2020, Indian Prime Minister invited foreign manufactures of defence products to manufacture in India. He made this announcement at Defence Expo 2020.
2. Defence ministry raised FDI limit in defence production to 74% from 49%.

Achievements of Indian Defence Production

1. In March 2020, India became 23rd largest arms exporter in the world.
2. India now exports defence products to 42 countries. Few examples of our exports are 5.56 x 45 mm Balk MKN  (SS109) cartridges to Australia, protective headgears & hard armour plater to Azerbaijan, helmets, bomb suppression blankets, soft armour panels to Germany, detonators to South Africa, night vision binoculars to Thailand and many more. 
3. Indian defence export has increased almost 9 times since 2014. It was Rs 2000 Crore in 2014 and now it has reached to Rs 17000 Crore.

Conclusion

DPEPP or Defence Production and Export Promotion Policy 2020 one of the steps of series taken by government to boost Indian defence production and exports. This historic policy may be useful to make India an economy of USD 5 trillion if implemented correctly. It may be opportunity for DPSUs like DRDO,  HAL, Bharat Electronics Ltd., Bharat dynamics, Hindustan shipyards and for startups also.

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