Strengthening the Defence Manufacturing Sector

• To be self-reliant in defense manufacturing and produce the appropriate technology, India must focus on long-term R&D-oriented planning.
• Recent government initiatives like Make in India and Atma Nirbhar Bharat are bringing the necessary change.
• DRDO, OFB, DPSUs and Armed Forces being part of the same Ministry regularly interact with each other for the design development and production of Defence equipment as per the requirements of Defence Forces.

Measures taken by DRDO for strengthening the industry:

• Accessibility of DRDO Test Facilities to Indian Industry.
• Identification of Development-cum-Production Partner/ Production Agency/ Lead System Integrator (DcPP/ PA/ LSI) for early integration of industry.
• Technology Development Fund (TDF) has been implemented to provide support for design and development of technologies/ prototypes, indigenisation of imported systems/ components and new systems especially by MSMEs/ Start-ups.
• Simpler Transfer of Technology (ToT) Policy to encourage industries
• Free access of DRDO patents to industries
• Identified 108 exclusive systems for development by industry which will not be taken by DRDO
• DRDO is focused to carry out R&D work on critical & advanced technologies that industries cannot do.

Measures proposed to be taken for strengthening the Ordnance Factories and DPSUs:

• To carve out a future growth path, a visioning exercise and study has been commissioned for DPSUs for restructuring and reforming them to become cost competitive and efficient.
• DPSUs have been encouraged to work as aggregators and maximize outsourcing from indigenous sources.
• Disinvestment of DPSUs is being pursued.
• Focus on modernization of production facilities through higher CAPEX.
• Investing in Industry 4.0 technologies in areas of Manufacturing, Supply Chain & other broader digital transformation initiatives.
• Focusing on emerging areas of Artificial Intelligence, Data Fusion, Web Technologies, Data Analytics, 3D Printing, Networking and Cyber Security. These technologies are now being incorporated into Products and Systems at the design stage itself.
• Change in the traditional ToT based manufacturing approach to a more proactive Co-development and Co-Production approach.
• Increased software based testing for reducing the time and efforts that go in testing of products.
• Promoting IP culture in DPSUs through Mission Raksha Gyan Shakti.
• For 2021-22, the allocation for Domestic procurement has been enhanced compared to previous years and is planned to be about 64.09 % i.e. Rs. 71,438.36 Crore of the allocated amount for military modernization.
• The Ministry of Defence has notified two ‘Positive Lists’ for Indigenisation comprising 209 items for which there would be an embargo on the import beyond the timeline indicated against them.
• An indigenization portal namely SRIJAN has been launched in August 2020 for DPSUs/OFB/Services with an industry interface to provide development support to MSMEs/Startups/Industry for import substitution.
• To enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories, the *Cabinet Committee on Security (CCS) had approved to convert Ordnance Factory Board (OFB), a subordinate office of Ministry of Defence, into one or more than one 100% Government owned corporate entities, registered under the Companies Act, 2013.
• The Cabinet in June 2021, has approved to convert the production units of OFB into 07 DPSUs with 41 units.
• The Government has enhanced FDI in Defence Sector up to 74% through the Automatic Route for companies seeking new defence industrial license and up to 100% by Government Route. These reforms are likely to attract foreign investment in Defence & Aerospace sector.
• Reforms in Offset policy have been included in DAP 2020, higher multipliers have been assigned for Transfer of Technology (ToT) to DPSUs/OFB.
• In order to promote indigenous design and development of defence equipment ‘Buy Indian-IDDM (Indigenously Designed, Developed and manufactured)’ category has been accorded top most priority for procurement of capital equipment.