For the first time ever India’s defence production has crossed Rs one lakh crore mark for in Financial Year (FY) 2022-23, marking a rise of more than 12 per cent over FY 2021-22, when it was Rs 95,000 crore.
The cherry on the cake is that the provisional figure of Rs 1,06,800 crore for the previous year is almost double the value of production (VoP) during the FY 2018-19, which stood at Rs 54,951 crore.
According to an official statement issued by the Ministry of Defence (MoD) last week, the number is expected to go up further once the data is received from the remaining private (sector) defence industries. However, neither the number or the identity of the remaining is disclosed.
“The feat is all the more gratifying considering that the VoP had declined from Rs 81,120 crore in 2018-19 to Rs 79,071 crore in 2019-20. Though this marginal decline was primarily due to the Covid-19 pandemic, it did raise concerns about the ability to stage a healthy recovery,” says Amit Cowshish, Former Financial Advisor (Acquisition), Ministry of Defence.
“The latest figures, which represent a growth of more than 12 per cent over the preceding financial years VoP of Rs 95,000 crore, belie those apprehensions. Maintaining the growth momentum is critical to MoD’s stated objective of raising the VoP to Rs 1,75, 000 crore by the FY 2024-25. In fact, the pace will have to be more than doubled to reach there,” he opines.
According to the former financial advisor, “The defence industry, especially the private sector, is being increasingly wooed by the government as a part of its Make in India project that aims at making the country a manufacturing hub.”
Initiatives announced by the government
Several policy initiatives and procedural reforms have been undertaken by the government in recent years to encourage the private sector entities, including the MSMEs and the start-ups, to take up design, development and manufacturing of defence equipment, which is crucial for achieving self-reliance in defence.
These measures include increasing proportion of the capital outlay being earmarked for procurement from the local companies, easing the industrial licensing process, facilitating exports, corporatisation of the ordnance factories board, and fine tuning of the procurement procedures.
These reforms have contributed to a nearly 200 per cent increase in the number of licenses issued in the last 7-8 years. However, “several stalled major acquisition programmes indicate many structural, financial and procedural issues remain to be addressed if India has to become truly self-reliant in defence production,” he adds.