Driving Naari Programme launched in Chandigarh
BENGALURU: Prime Minister Narendra Modi on Wednesday said there is need to develop defence industry in India. ‘It is no longer enough to buy equipment and assemble them. We have been doing this in the past, without absorbing any technology or developing our own capabilities. In some areas, we are where we were three decades ago,’ PM said.
Speaking after inaugurating 10th edition of Aero India at Air Force station Yelahnka, he said public sector companies’ needs to do much better than they are doing now. There is need to exploit their huge assets and a vast potential and also make them accountable.
The government, he said, is reforming defence procurement policies and procedures that would give a clear preference for equipment manufactured in India. Procurement procedures will ensure simplicity, accountability and speedy decision making. ‘We must indicate a clear road map of future needs and take into account new technology trends and nature of future challenges. We must pay attention to developing supply chains, with emphasis on innovation.’
The Government will build an industry that will have room for everyone, public sector, private sector and foreign firms. ‘From sellers, foreign firms must turn into strategic partners. We need their technology, skills, systems integration and manufacturing strength. Foreign firms can use India as part of their global supply chain,’ he said.
Permitted level of Foreign Direct Investment has been increased to 49 per cent and it can go higher, if the project brings state-of-the art technology. It has permitted investments up to 24% by Foreign Institutional Investments and there is no longer a need to have a single Indian investor with at least a 51% stake, the PM said.
He said nearly 60 per cent of defence equipment is imported and India is spending tens of billions of dollars on acquisition from abroad. ‘There are studies that show that even a 20 to 25 per cent reduction in imports could directly create an additional 1 to 2 lakh highly skilled jobs in the country.’
‘If we could raise the percentage of domestic procurement from 40% to 70% in the next five years, we would double the output in our defence industry. This is why it is at the heart of our Make in India programme.’
He said defence budgets around the world are becoming tighter and India’s frugal but sophisticated manufacturing and engineering services sectors can help reduce costs and at the same time there is need to increase the defence preparedness and also modernise the armed forces given the security challenges and international responsibilities of the country.
The PM said there is need to develop a financing system suited to the special needs of the defence industry as the governments are the main buyers, capital investments are large and the risks are high and need for tax system does not discriminate against domestic manufacture in comparison to imports.
Level Playing Field:
Modi said In India, the defence industry in the government sector alone employs nearly 2 lakh workers and thousands of engineers and scientists. It supports a very large pool of small and medium industries and produce an output of nearly 7 billion dollars annually.
In the private sector the defence industry is still small, but it employees thousands of people. “We are expanding the role of private sector, even for major platforms. Our goal is to provide a level playing field for all. We speak in terms of national capacity, not public sector or private sector.’
Offsets System Crucial:
Modi said Offsets system is a crucial instrument to develop and upgrade the defence industry. The government is said introduced significant reforms in offsets policy and there still needs lot of improvements and the same will be pursued in consultation with domestic industry and our foreign partners.
‘I want our offsets policy not as a means to export low-end products, but to acquire state-of-the art technology and skills in core areas of priority,’ he said.
Government Support:
The PM said government’s support for research and development is essential for defence sector and it would be accompanied by a degree of assurance on purchase. ‘We are introducing a scheme to provide up to 80 per cent of funding from the Government for development of a prototype in India. And, we are also launching a Technology Development Fund.’
Research and development is confined to government laboratories and there is need to involve scientists, soldiers, academia, industry and independent experts, he said.
Clear Export Policies:
Modi said the government has its export policy clearer, simpler and predictable. “We will also abide by the highest standards of export controls and international responsibility. We will expand our exports, but we will ensure that our equipment and technology do not fall into the wrong hands. India’s record in this area has been impeccable and it will remain so,” he said.
Excitement in MSMEs:
Complementing the small and medium enterprises for their achievements, the PM said there is new excitement in small and medium scale sector and many of the biggest global firms are forming strategic partnerships in India.
‘In September 2014 Dynamatic Technologies and its collaborator Boeing inaugurated a plant in India to manufacture critical parts for a Boeing that is sold globally. I am pleased to learn that the first set of parts is ready for shipment today. But, we still need to do more.’
Special Universities:
The PM said the government will set up special universities and skills development centres to train people as there is need for a vast pool of highly skilled and qualified human resources for the defence industry.
‘Aerospace industry alone would need about 2 lakh people in another ten years. We will set up special universities and skill development centres to cater to our defence industry, just as we have done in atomic energy and space.’ he said.
