780 more defence sub-systems & components to be barred for imports

780 more defence sub-systems & components to be barred for imports

Subject: Schemes

Section: Defence

Context:

To minimise imports by Defence Public Sector Undertakings (DPSUs), Defence Minister Rajnath Singh has approved the third Positive Indigenisation List (PIL) of 780 strategically important sub-systems and components, which will be strictly procured from the domestic industry with a timeline beginning from December 2023 to December 2028.

• The Ministry stated that the indigenisation of these items will be taken up through different routes under ‘Make’ category, which aims to achieve self-reliance by involving greater participation of the Indian industry. Projects involving design and development of equipment, systems, major platforms or upgrades thereof by the industry can be taken up under this category.
• The third PIL incorporates wide variety of components and sub-systems of equipment and different platforms, including Arjun tanks, Advanced Light Helicopters, Light Combat Helicopters, Jaguars and Sukhois.
• Last month, Additional Secretary (Defence Production) Sanjay Jaju stated the export figure for defence items and technologies touched a record high of Rs 13,000 crores in the financial year of 2020-21. Of that, 70 percent was contributed by private indigenous companies and remaining by the DPSUs.

What is the ‘Make’ Category?

• The ‘Make’ category of capital acquisition is the cornerstone of the Make in India initiative that seeks to build indigenous capabilities through the involvement of both public and private sector.
• ‘Make-I’ refers to government-funded projects while ‘Make-II’ covers industry-funded programmes.
  • Make-I involved in development of big-ticket platforms such as light tank and communication equipment with Indian security protocols.
  • Make-II category involves prototype development of military hardware or its upgrade for import substitution for which no government funding is provided.
    • The five projects approved under the industry-funded Make-II procedure are simulators for Apache attacks helicopters and Chinook multi-mission choppers, wearable robotic equipment for aircraft maintenance, autonomous combat vehicle and integrated surveillance and targeting system for mechanised forces.
• Another sub-category under ‘Make’ is ‘Make-III’ that covers military hardware that may not be designed and developed indigenously, but can be manufactured in the country for import substitution, and Indian firms may manufacture these in collaboration with foreign partners.

Defence Acquisition Procedure (DAP) 2020

• It enables the notification of a List of Weapons or Platforms that will be banned for import.
• It focuses on Foreign Direct Investment (FDI) in defence manufacturing and indigenization of the manufacturing prices.
• It also introduces several new ideas such as the need to incorporate artificial intelligence in platforms and systems, use of indigenous software in defence equipment and ‘innovation’ by Start-ups and MSMEs as a new category of defence acquisition.
• It includes following procurement categories: Buy (Indian – Indigenously Designed Developed and Manufactured), Buy (Indian), Buy and Make (Indian), Buy (Global – Manufacture in India) and Buy (Global).
  • It increases the Indigenous Content (IC) requirement for all projects from 40% to 50% earlier, depending on the category, to 50% to 60%.
  • Only under procurement through Buy (Global), foreign vendors can have 30% IC from Indian companies.