To achieve the government’s $5 trillion economy target by 2024, Defence Minister Rajnath Singh sees the private sector playing a critical role. The minister speaking at the Global Business Summit on Saturday urged for increased participation of the private sector in defence manufacturing for India to become the $5 trillion economy, the Defence Ministry said in a statement. The minister highlighted the government’s major initiatives such as Make in India apart from introducing policies relevant to the digital economy and fostering human capital to hit $1 trillion goal by 2025 for the manufacturing sector.
To address the problem of private investment in the defence sector, the minister said the government has undertaken multiple reforms for establishing synergy between the industry and the public sector. “In our envisaged Defence Production Policy, we have clearly spelt out our goal to achieve a turnover of $26 billion in aerospace and defence goods & services by 2025. This will have huge implications for India’s endeavours to promote R&D, innovation and its efforts to secure a place in global supply chains,” said Singh.
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In order to boost defence exports, the minister that Defence Public Sector Undertakings have been encouraged to increase their export portfolio to 25 per cent of their turnover as the government intends to export defence goods and services worth $5 billion in coming five years. The government is willing to extend lines of credit and grants to friendly foreign countries over the next five years, he added.
The FDI ceiling under the automatic route, which was increased from 26 per cent to 49 per cent in 2014 and up to 100 per cent under the government approval route is now showing results, according to Singh. The FDI inflows till December 2019 in the defence and aerospace sector stood at more than Rs 3,155 crore. “Of this, Rs 1,834 crore have received since 2014. I am sure that the volume of investment will increase many-fold when some of the major programmes, which are in the pipeline, move into the execution phase,” he said.