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India’s Aatmanirbhar Defence Initiative: Transforming from Importer to Global Exporter

India has instituted a ground-breaking ban on the import of 351 defence items, effective December 2022, aligning with the government’s pursuit of self-reliance and reduced reliance on foreign nations. The defence ministry has outlined a phased plan, ceasing imports of 172 items in 2022, 89 in 2023, and 90 in 2024. The ‘Aatmanirbhar’ initiative aims to save ₹3,000 crores annually. In conjunction with these measures, FDI limits in the defence sector were raised from 49% to 74% in May 2020, and the dissolution of the Ordnance Factory Board (OFB) underscores a commitment to modernization. With a planned expenditure of $130 billion on defence in the next five years, India targets a $25 billion turnover, including $5 billion from exports.

Source: BusinessToday.in

The comprehensive ban encompasses a wide array of defence items, spanning firearms, ammunition, radars, sonars, communication systems, and electronic warfare equipment. By restricting imports of these items, the government seeks to stimulate domestic production, foster innovation, and establish a robust ecosystem for indigenous defence manufacturing.

“To promote ‘Aatmanirbharta’ in defence and minimise imports by defence public sector undertakings, the Ministry of Defence has approved fourth Positive Indigenisation List (PIL) of 928 strategically-important line replacement units/sub-systems/spares and components, including high-end materials and spares, with import substitution value worth Rs 715 crore,” the ministry said in a statement. Against the backdrop of border tensions and the Russia-Ukraine crisis, India is escalating defence investments to bolster its capacity for autonomous development of defence systems. In pursuit of this goal, the government has introduced various initiatives and policies:

• New category: ‘Buy (Global- Manufacture in India)’ introduced for ab-initio indigenization, encouraging Foreign OEMs to establish manufacturing entities in India.
• Introduction of Make III categories to achieve self-reliance through import substitution.
• Reservation of Cases with AoN cost ≤100 Crs, extendable to ≤150 Crs for MSMEs with annual cash flow based on deliveries below Rs. 100 Crs.
• Simplification of Industrial licensing process with extended validity period.
• Launch of iDEX scheme, promoting innovations for Defence Excellence involving start-ups & MSMEs.
• Reforms in Offset policy, focusing on attracting investment and technology transfer with higher multipliers.
• Introduction of indigenization portal ‘SRIJAN’ to facilitate indigenization by Indian Industry, including MSMEs.
• Opening up of Defence Research & Development (R&D) for industry, start-ups, and academia, with 25% of defense R&D budget dedicated to promoting domestic defense technology.

India’s defence exports surged from Rs. 686 Crore in FY 2013-14 to nearly Rs. 16,000 Crore in FY 2022-23, marking a remarkable 23-fold increase and showcasing the nation’s progress in global defence manufacturing. With exports spanning 85 countries, India’s defence industry, once a primary importer, now exports major platforms, including aircraft, artillery, missiles, rockets, radars, simulators, and armoured vehicles. The global demand for India’s indigenous products, such as the LCA-Tejas, Light Combat Helicopters, Aircraft Carriers, and MRO activities, is steadily rising.

Image credit: indianairforce.nic.in

According to a recent article in Forbes India, key defense stocks like Bharat Electronics, Hindustan Aeronautics, Bharat Dynamics, Solar Industries, Garden Reach Shipbuilders & Engineers, Cochin Shipyard and Data Patterns have jumped 30 to 145 percent in 2022 so far, outperforming benchmark indices Sensex and Nifty in this period

Leading the Aatmanirbhar initiative, Isler India is at the forefront of addressing challenges within the fragmented Indian manufacturing landscape, marked by trust, transparency, and delays. Our mission is to centralize this landscape to establish a more efficient and reliable manufacturing process. Leveraging our AI/ML-powered Supply Network Control Tower and strategic approaches, we ensure complete transparency at every stage, facilitating timely deliveries worldwide. Isler India offers a comprehensive Design-to-Deliver One Stop Digitized Manufacturing Solution, playing a pivotal role in the success of Aatmanirbhar Bharat.

Author:

Chirag Kakkar, Co-Founder & COO of Isler India, is a visionary leader dedicated to driving innovation and operational excellence. Leading a dynamic team, he focuses on empowering businesses and elevating the manufacturing industry through cutting-edge technologies and pioneering approaches. Committed to making a significant impact, Chirag is at the forefront of shaping the future of industry with strategic leadership and a passion for excellence.