India’s Defence Ministry announced on Sunday that it will ban the imports of 101 items of military equipment in an attempt to boost its indigenous production.
The 101 items, with different embargo timelines, range from some types of ammunition, sonars, radars, artillery guns and assault rifles to missile destroyers, transport aircraft, light combat helicopters, wheeled armoured fighting vehicles, conventional diesel-electric submarines and communication satellites.
Announcing the decision, defence minister Rajnath Singh said it was “a big step towards self-reliance in defence production” in accordance with Prime Minister Narendra Modi’s recent “Atmanirbhar Bharat” initiative.
Though outright procurements of the notified products from abroad will be banned, Indian public and private sector companies can continue to tie-up with foreign manufacturers to produce them in India. This is in tune with the government decision in May to hike the FDI limit to 74% from 49% in the defence production sector through the automatic clearance route.
The new negative list includes many products that are already being produced domestically or are in the research and development phase. The list, for instance, includes the 123 Tejas light combat aircraft that IAF is expected to induct for over Rs 85,000 crore. “Such products have been included to ensure their indigenous content is increased progressively,” said an official.
Rajnath Singh said promulgation of the list, which will be reviewed and expanded every year as domestic production capacity increases, will allow lead-time to the Indian industry to prepare itself about the anticipated requirements of the over 15-lakh strong armed forces.
“This decision will offer a great opportunity to the Indian defence industry to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies developed by DRDO to meet the requirements of the armed forces,” he added.
India, of course, has for long languished in the strategically-vulnerable and embarrassing position of being among the top arms importers in the world. In the 2015-2019 timeframe, for instance, India was the second-largest buyer of foreign weaponry after Saudi Arabia, accounting for 9.2% of the total global arms imports, as was earlier reported by TOI.
The minister said 260 deals worth Rs 3.5 lakh crore ($47 billion) for products now being embargoed were contracted for the Indian armed forces between April 2015 and August 2020.
Now, with the negative list, it is estimated contracts worth almost Rs 4 lakh crore ($53 billion) will be placed upon the domestic industry within the next six to seven years. This will include items worth Rs 1.3 lakh crore for the Army and IAF, and another 1.4 lakh crore for the Navy, he added.
In a related step, the MoD has also “bifurcated” the around Rs 1.18 lakh crore capital outlay for 2020-21 between domestic and foreign capital procurement routes. “A separate budget head has been created with an outlay of nearly Rs 52,000 crore for domestic capital procurement in the current financial year,” said Singh.
The minister said all necessary steps would be taken to ensure that timelines for production of equipment as per the negative imports list are met, which will include a coordinated mechanism for hand holding of the industry by the armed forces.
Citing the example of wheeled armoured fighting vehicles, with the indicative import embargo date of December 2021, he said the Army is expected to buy around 200 of them at an approximate cost of over Rs 5,000 crore.
All necessary steps would be taken to ensure that timelines for production of equipment as per the Negative Import List are met, which will include a co-ordinated mechanism for hand holding of the industry by the Defence Services.
Similarly, the Navy is likely to place demands for conventional diesel-electric submarines with the indicative import embargo date of December 2021, of which it expects to contract about six at an approximate cost of almost Rs 42,000 crore.
The MoD said the list was prepared after several rounds of consultations with all stakeholders, including the Army, Navy, IAF, DRDO, defence PSUs, Ordnance Factory Board (OFB) and the private industry, to assess current and future capabilities of the Indian industry for manufacturing various ammunition, weapons, platforms and equipment within the country.
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