The government aims to provide impetus to self-reliance in defence manufacturing under the ‘Atmanirbhar Bharat’ package. In implementing such a framework and to position India among leading countries in defence and aerospace sectors, the defence ministry has formulated a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020).

Defence industry in India

The size of the defence industry, including aerospace and naval shipbuilding industry, is currently estimated to be about Rs 80,000 crore (2019-20). While the contribution of the public sector is estimated to be Rs 63,000 crore, the share of the private sector has steadily grown to Rs 17,000 crore over the years. 

Defence Public Sector Undertakings (DPSUs) that have been the pillars of the defence production ecosystem in the country are:

Aerospace - Hindustan Aeronautics Limited (HAL)

Naval - Mazagon Dock Shipbuilders Limited (MDL), Garden Reach Shipbuilders & Engineers Limited (GRSE), Goa Shipyard Limited (GSL) and Hindustan Shipyard Limited (HSL).

Special metals and alloys - Bharat Dynamics Limited (BDL), BEML Ltd, Mishra Dhatu Nigam (MIDHANI).

Land systems - Ordnance Factory Board (OFB). 

Strategic electronics - Bharat Electronics Limited (BEL). 

In the private sector, many engineering majors have diversified and joined the defence sector. More than 460 licenses have so far been issued to private companies for production of defence equipment. 

The defence industry is supported by a strong base of over 8,000 MSMEs that provide strength and vibrancy to the defence supply chain.

Defence Production and Export Promotion Policy

The DPEPP 2020 is envisaged as an overarching guiding document of ministry to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports.

Objectives of the policy:

• Achieve a turnover of Rs 1.75 lakh crore ($25 billion) including export of Rs 35,000 crore ($5 billion) in aerospace and defence goods and services by 2025.

• Develop a dynamic, robust and competitive defence industry, including aerospace and naval shipbuilding industry to cater to the needs of armed forces with quality products.

• Reduce dependence on imports and take forward ‘Make in India’ initiatives through domestic design and development.

• Promote export of defence products and become part of the global defence value chains.

• Create an environment that encourages R&D, rewards innovation, creates Indian IP ownership and promotes a robust and self-reliant defence industry.

Focus areas of the policy:

• Procurement reforms.

• Indigenisation and support to MSMEs/startups.

• Optimise resource allocation.

• Investment promotion, FDI and ease of doing business.

• Innovation and R&D.

• DPSUs and Ordnance Factory Board (OFB). 

• Quality assurance and testing infrastructure.

• Export promotion.

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