Why in news?

As per the Defence Ministry, India’s indigenous defence production rose to a record high value of Rs 1.27 lakh crore in 2023-24. The 16.7% growth against the previous fiscal is attributed to government policies and self-reliance initiatives.

What’s in today’s article?

• Steps taken by the government to increase manufacturing in defence
• Defence Manufacturing in FY 2023-24
• Defence Export

Steps taken by the government to increase manufacturing in defence

• Policy Reforms and Strategic Initiatives
  • Defence Procurement Procedure (DPP)
    • The DPP has been revised to promote indigenous manufacturing and increase transparency and efficiency in the procurement process.
    • It includes a category called 'Buy (Indian-IDDM)' which gives preference to products that are designed, developed, and manufactured indigenously.
  • Defence Production and Export Promotion Policy (DPEPP) 2020
    • This policy aims to achieve a turnover of ₹1.75 lakh crore in aerospace and defense goods and services by 2025, including exports of ₹35,000 crore.
  • Strategic Partnership Model
    • This model encourages collaboration between Indian private companies and foreign original equipment manufacturers (OEMs) to set up manufacturing facilities in India, fostering technology transfer and capability building.
  • Negative import list/positive indigenisation list
    • So far, five positive indigenisation lists have been released.
    • The items mentioned on the lists cannot be imported by the Services and should be sourced from within the country.
  • Defence Offset Policy
    • The policy requires foreign defense companies to invest a part of their contract value in India, promoting technology transfer and local manufacturing.
• Financial and Structural Support
  • Foreign Direct Investment (FDI)
    • The FDI limit in the defense sector has been raised to 74% through the automatic route and up to 100% through government approval in cases involving access to modern technology or for other reasons to be recorded.
  • Defence Corridors
    • Defense industrial corridors have been established in Uttar Pradesh and Tamil Nadu to create a conducive ecosystem for defense manufacturing.
    • These corridors aim to attract investments and generate employment.
  • Budget 2023-24
    • Government has earmarked 75 per cent of its defence capital budget for 2023-24 towards procurements from domestic sources
• Infrastructure and Innovation
  • Innovation for Defence Excellence (iDEX)
    • iDEX is an initiative to foster innovation and technology development in defense and aerospace by engaging startups and MSMEs.
    • It provides them with financial support and a platform to showcase their solutions.
  • Technology Development Fund (TDF)
    • This fund supports the indigenous development of defense technology and products. It provides grants to MSMEs, startups, and academia for research and development projects.
• Public-Private Partnership
  • Ordnance Factory Board (OFB) Corporatization
    • The OFB has been restructured into seven new Defense Public Sector Undertakings (DPSUs) to enhance autonomy, efficiency, and accountability.
  • Increased Role of Private Sector
    • The government has been actively encouraging private sector participation in defense manufacturing through measures like allowing private companies to bid for contracts previously reserved for DPSUs.

Defence Manufacturing in FY 2023-24

• India’s defence production has reached an unprecedented milestone, hitting approximately Rs 1.27 lakh crore in the financial year 2023-24.
• This marks a 16.7 percent increase over the previous year and an impressive 60 percent growth since 2019-20.
• In the fiscal year 2023-24, Defense Public Sector Undertakings (DPSUs) and other Public Sector Units (PSUs) contributed 79.2% of the total value of production (VoP) in India's defense manufacturing sector, while the private sector accounted for 20.8%.
• Both public and private sectors have demonstrated steady growth in absolute terms.
• 

Defence Export

• India’s defence exports have also seen remarkable growth, contributing to the overall increase in indigenous defence production.
• Defence exports reached a record high of Rs 21,083 crore in FY 2023-24, reflecting a 32.5 percent growth over the previous fiscal’s Rs 15,920 crore.