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Restrictions announced on import of 101 defence items, boost to domestic manufacturing

In a major push to promote the domestic defence industry, Defence Minister Rajnath Singh on Sunday announced restrictions on import of 101 weapons and military platforms including light combat helicopters, transport aircraft, conventional submarines and cruise missiles by 2024.

Making the announcement on Twitter, the defence minister estimated that the domestic defence industry would receive contracts worth almost Rs four lakh crore within the next five to seven years as a result of the decision to prune the import list.

Singh said the defence ministry is now ready for a “big push” to boost indigenous defence manufacturing in tune with Prime Minister Narendra Modi”s call for ”Atmanirbhar Bharat” (Self-Reliant India).

According to officials, the list of 101 items includes towed artillery guns, short range surface to air missiles, cruise missiles, offshore patrol vessels, electronic warfare systems, next generation missile vessels, floating dock, anti-submarine rocket launchers and short range maritime reconnaissance aircraft.

The list also includes basic trainer aircraft, lightweight rocket launchers, multi-barrel rocket launchers, missile destroyers, sonar systems for ships, rockets, ASTRA-MK I beyond visual range air-to-air missiles, light machine guns and artillery ammunition (155 mm) and ship-borne medium range guns.

Singh”s announcement came a week after a draft defence procurement policy of the defence ministry projected a turnover of Rs 1.75 lakh crore (USD 25 billion) in defence manufacturing by 2025.

India is one of the most lucrative markets for global defence giants. The country figured among the top three importers of military hardware in the world for the last eight years.

According to estimates, the Indian armed forces are projected to spend around USD 130 billion in capital procurement in the next five years.

“This is a big step towards self-reliance in defence. It also offers a great opportunity to the Indian defence industry to rise to the occasion to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by the DRDO,” Singh said.

In another relevant step, he said the defence ministry has bifurcated the capital procurement budget 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, the defence minister added.

Singh said all necessary steps would be taken to ensure that timelines for domestic production of equipment identified under a negative list for import are met, adding the measures will include a co-ordinated mechanism for hand-holding of the industry by the defence services.

“The embargo on imports is planned to be progressively implemented between 2020 and 2024. The aim behind promulgation of the list is to apprise the Indian defence industry about the anticipated requirements of the armed forces so that they are better prepared to realise the goal of indigenisation,” he said.

The defence minister said the list of 101 items was prepared by the ministry after several rounds of consultations with all stakeholders, including the three services, the Defence Research and Development Organisation (DRDO), defence public sector undertakings, ordnance factory board and private industries.

“Almost 260 schemes of such items were contracted by the tri-services at an approximate cost of Rs 3.5 lakh crore between April 2015 and August 2020. With the latest embargo on import of 101 items, it is estimated that contracts worth almost Rs four lakh crore will be placed upon the domestic industry within the next five to seven years,” Singh said.

“Of these, items worth almost Rs 1,30,000 crore each are anticipated for the Army and the Air Force, while items worth almost Rs 1,40,000 crore are anticipated by the Navy over the same period,” he added.

Singh said the list also includes, wheeled armoured fighting vehicles (AFVs) with indicative import embargo date of December 2021, of which the Army is expected to contract almost 200 at an approximate cost of over Rs 5,000 crore.

“Similarly, the Navy is likely to place demands for submarines with 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,” he said.

“For the Air Force, it is decided to enlist the LCA MK 1A with an indicative embargo date of December 2020. Of these, 123 are anticipated at an approximate cost of over Rs 85,000 crore,” he added.

According to a government document, import restrictions on 69 items will come into force from December 2020, while the embargo on another 11 items will be applicable from December 2021.

A separate list of four items has been identified for import restrictions from December 2022, while the ban on two separate sets of eight items will be applicable from December 2023 and December 2024.

The import ban on long range land attack cruise missiles will come into force from December 2025.

The defence minister said more such equipment for import embargo would be identified progressively by the department of military affairs in consultation with all stakeholders.

He said a note on this will also be made in the defence acquisition procedure (DAP) to ensure that no item in the negative list is processed for import in the future.

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