Economic package for defence sector: Government has navigated a fine line, say industry experts

By: |
Updated: May 19, 2020 1:41 PM

The MoD has started the process of identifying projects which can be fast-tracked and produced locally in India.

Economic package, Economic package for defence sector, covid 19 pandemic, Samtel Avionics Limited, MSMEs, defence manufacturing, defence procurements, defence productionAs these measures are implemented, they will further accelerate the defence procurement and manufacturing process.

India has conventionally imported a significant portion of its defence systems and equipment. Over the last few years, the government has demonstrated commitment to reverse the trend through its ‘Make in India’ initiative. “Now even in these tough times when each one of us is fighting the COVID-19 pandemic, the government has shown commendable resolve by offering an economic stimulus to the stressed industry,” says Puneet Kaura, Managing Director & CEO at Samtel Avionics Limited.

According to Kaura, “The financial package announced for the MSMEs last week was viewed with a lot of optimism. And close on its heels are the strategic initiatives by the Finance Minister which are designed to boost the indigenous defence industry. I am sure that the separate budgetary provisions for India-made defence items, and the negative list of weapons which will ban the items that can be imported, will prove to be a shot in the arm for the Indian defence industry.”

“Empowering the sector, relaxing the norms, steps taken for progressive indigenisation of defence manufacturing, the structural reforms across key sectors including defence are policy measures that will not only accelerate defence procurements, but also promote technical capabilities for in-house research and design,” he adds.

As these measures are implemented, they will further accelerate the defence procurement and manufacturing process. It will lead to the development and growth of enterprises, job creation and imparting momentous boost to India’s defence ambitions led by the MSME sector. “We see an opportunity here, as in order to accommodate their stressed budgets, global companies and different governments should increasingly look for much more cost-competitive supply partners – and this is where we come into the picture,” Kaura concludes

Sharing similar views, Raaj Nair, VP International Business, SSS Defence says, “Make in India is absolutely necessary for self-reliance, especially wherever possible in critical sectors like defence production, as this will hopefully enhance India’s attractiveness as a defence manufacturing nation.”

“The government has navigated a fine line between promoting self-reliance in critical weapons systems, spares and incentivizing inward investment. The establishment of a separate budget head for domestic capital procurement and the time-bound acquisition will catalyse domestic defence sector manufacturing. It will help the sector by providing transparency & predictability of expected procurement. It will be possible to do better production planning. It will reduce downtime, improve reliability & save high costs of imports” Nair opines.

According to him, “Going forward, India may export these parts to nations with the same or similar equipment. Reforms will ensure faster decision making in defence procurement by setting realistic quality requirements, a contract management unit, overhauling trial and testing procedures.”

“The new big announcement actually means a lot to Indian Defence OEMs like us at SSS Defence who is not only committed to “Make in India” but also to a new breed of innovation that is dedicated to the specific requirements of our Armed Forces/Law enforcement units and their very unique theatre of operations. We are also investing in special projects that are defined by international standards like SOCOM but push those breaking points without breaching Indian cost frontiers”, he says.

“By investing in the creation of intellectual property and thereafter ensuring its translation into high-performance products through our quality-centric manufacturing, we are creating the benchmark for “Truly Make in India”. We believe that the strategic advantages of closer military – industry collaboration can only be harnessed as an OEM that aims for an international footprint and not simply as an integrator who will always be hamstrung by reliance on foreign technologies.”

“The negative import list shouldn’t be arbitrarily prepared without consultation with the industry. Such a step would be very myopic and would lead to the total failure of India’s Strategy & Security in terms of Defence Production & Import reduction,” he urges.

Today the country is capable of making very high quality weapon systems such as 155mm Artillery Guns(towed/mounted), Ultralight guns, Antitank guided missiles, upgraded CET65 Torpedoes, SRSAMs, .338 Lapua magnum / .308 Sniper Rifles, Assault Rifles, Carbines, Day/Night(Thermal) Optical sights and many more in the long list.

The MoD has started the process of identifying projects which can be fast-tracked and produced locally in India. This will not only help save the funds but will also help our MSMEs and the private sector. The route of FTP for capital acquisition from a foreign OEM should be totally stopped unless the technology doesn’t exist at all within the country.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1IAF’s first woman commissioned officer has died at age 96
2ITBP deputes first officer to head eastern command along LAC
3Pakistan unlikely to exit FATF’s grey list: Report