22-July-2024-Editorial

FIFTH POSITIVE INDIGENISATION LIST (PIL) 

The Ministry of Defence (MoD) has issued the fifth Positive Indigenisation List (PIL) aimed at enhancing self-reliance in defence production and reducing import dependency. 

Purpose and Scope 

• Items Included: The list contains 346 items to advance Aatmanirbharta (self-reliance) in defence. 

• Procurement: These items must be procured from Indian industries, including Micro, Small, and Medium Enterprises (MSMEs) and startups. 

• Strategic Importance: Items include Line Replacement Units (LRUs), systems, sub-systems, assemblies, sub-assemblies, spares, components, and raw materials. 

Implementation 

• Srijan Portal: The list is available on the MoD’s Srijan portal, providing a platform for Defence Public Sector Undertakings (DPSUs) and service headquarters (SHQs) to offer defence items for indigenisation to private industries. 

• DPSUs Actions: DPSUs like Hindustan Aeronautics Limited (HAL), Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), among others, are issuing Expressions of Interest (EoIs) and Requests For Tender or Proposals (RFPs). 

Impact 

• Import Substitution: The indigenisation of these items is expected to substitute imports worth Rs 1,048 crore. 

• Domestic Assurance: The initiative ensures domestic defence industry development, encouraging them to produce defence products without competition from imports. 

Future Goals 

• Expansion Plans: The MoD plans to expand the list annually up to 2025, increasing the number of indigenised items. 

• Long-term Objective: The incremental approach aims to achieve greater self-reliance in defence production. 

Positive Indigenisation List (PIL) 

About PIL 

• Definition: The PIL is a list of items that must be purchased by the Indian armed forces from domestic manufacturers, including the private sector and DPSUs. 

• Introduction: Introduced in the Defence Acquisition Procedure (DAP) 2020, it focuses on import substitution for major systems, platforms, weapon systems, sensors, and munitions. 

Progress 

• First PIL: Launched in August 2020. 

• Total Items: Currently, there are 4,666 items across all lists. 

• Indigenised Items: So far, 2,972 items worth Rs 3,400 crore in import substitution value have been indigenised. 

• Additional Lists: In addition to the DPSUs lists, the Department of Military Affairs (DMA) has notified five positive indigenisation lists of 509 items, including complex systems, sensors, weapons, and ammunition. 

Need for Indigenisation of Defence in India 

Import Dependency 

• Current Status: India remains the world’s largest arms importer. 

• Statistics: From 2019 to 2023, India accounted for 9.8% of global arms imports. 

Strategic Autonomy 

• Risks: Heavy reliance on foreign arms compromises India’s strategic autonomy. 

• Benefits: Indigenous production reduces dependency on external sources and ensures uninterrupted supply during crises. 

• Political Leverage: A self-reliant defence industry enhances India’s political leverage in international relations. 

Economic Benefits 

• Domestic Economy: Indigenisation supports job creation, innovation, and industrial growth. 

• Cost-effectiveness: Indigenous production is more cost-effective in the long run, reducing procurement and maintenance costs. 

Sustainable Development 

• National Interests: Indigenisation ensures the defence industry grows in harmony with national interests and environmental considerations. 

Status of Indigenisation in Defence Sector 

Rise in Exports 

• FY 2023-24: Defence exports reached Rs 21,083 crore (approx. USD 2.63 Billion), a 32.5% increase from the previous fiscal year. 

• 10-Year Growth: A 31-fold increase in defence exports compared to FY 2013-14. 

• Contributions: The private sector and DPSUs contributed 60% and 40% respectively to this growth. 

Achievements 

• Advanced Systems: Production of 155 mm Artillery Gun ‘Dhanush’, Light Combat Aircraft ‘Tejas’, INS Vikrant, and Advanced Towed Artillery Gun (ATAG) howitzer. 

Reduction in Import Dependency 

• Statistics: Expenditure on foreign defence procurement decreased from 46% to 36% over the past four years. 

Growth in Domestic Procurement Share 

• Increase: Domestic procurement share rose from 54% in 2018-19 to 68% in the current year. 

• Budget Allocation: 25% of the defence budget is allocated for procurement from the private industry. 

Value of Production 

• Growth: The value of production by public and private sector defence companies increased from Rs 79,071 crore to Rs 84,643 crore in the past two years. 

Initiatives Related to Indigenisation in the Defence Sector 

Defence Procurement Policy (DPP) 2016 

• Buy-IDDM: The policy introduced the “Buy-IDDM” (Indigenous Designed and Manufactured) Developed category of acquisition, giving it top priority. 

Defence Acquisition Procedure (DAP) 2020 

• Promotion: Aims to promote Atmanirbhar Bharat Abhiyaan in defence manufacturing. 

• Features: Includes PIL, priority to indigenous procurement, MSME reservation, increased indigenous content, and new categories to promote ‘Make in India’. 

Industrial Licensing 

• Streamlined Process: Easier investment with extended validity. 

Foreign Direct Investment (FDI) 

• Policy: Allows up to 74% FDI under the automatic route. 

Make Procedure 

• Promotion: The “Make” procedure promotes indigenous design, development, and manufacturing of defence equipment. 

Defence Industrial Corridors 

• Corridors: Established in Uttar Pradesh and Tamil Nadu to attract investments and build a comprehensive defence manufacturing ecosystem. 

• Investments: Rs 6,089 crore in investments. 

Innovative and Supportive Schemes 

• Mission DefSpace: Launched to advance space technology for defence applications. 

• Innovations for Defence Excellence (iDEX): Supports innovation in defence by engaging startups, MSMEs, and research institutions. 

• SRIJAN Portal: Facilitates indigenisation, listing 19,509 items for local production. 

• Research and Development (R&D): 25% of the R&D budget allocated for industry-led R&D.