Second negative import list of defence products on the cards to boost ‘Atamnirbhar Bharat’

To propel the self-reliant narrative and to give a push to “Atamnirbhar Bharat” initiative announced by the Prime Minister, Narendra Modi, the Union Government is working on the second negative import list of defence items. Already import embargo has been announced on 101 items to boost indigenization of defence production.

With the latest embargo on import of 101 items, it is estimated that contracts worth almost 4 lakh crore will be placed upon the domestic industry within the next five to seven years. Of these, items worth almost 1,30,000 crore each are anticipated for the Army and the Air Force while items worth almost 1,40,000 crore are anticipated by the Navy over the same period.

That the government is working on the second negative import list of defence products was confirmed by none other than Secretary, Department of Defence Production, Ministry of Defence during a webinar on “Army Make Projects-2020”organized jointly by the Indian Army and industry body FICCI on August 17, 2020 when he invited the Indian industry to invest and explore opportunities in the defence sector. He announced, “We are also examining when the second list will come, and we expect you (industry)to come forward and start investing to meet our requirements.” Secretary DDP, Ministry of Defence went on to observe, “it will be a continuous process and the government will, periodically, expand the list”. He said that the announcement of the first set of embargoed items on imports would further boost and accelerate the process of indigenization. “Industry will also have to meet the needs of future wars with future products. The Industry will now have to shoulder the responsibility of catering to the requirements of embargoed items domestically.” In order to attract more foreign investments in the defence sector, “The proposal for up to 74% FDI in defence sector through automated route has already been submitted to the Cabinet.” 

The draft Defence Production and Export Promotion Policy 2020 focuses on attaining a target of US$ 25 billion of domestic production and US$ 5 billion of exports by 2025. Secretary DDP, Ministry of Defence explained that the government has launched various policy initiatives to make the sector more attractive for the private sector. “All policies of the government, including the Defence Industrial Corridors, Defence Production and Export Promotion Policy and the Negative Import List are focusing to ensure that our industry becomes the top producer of defence items in the world.” Highlighting the potential of Army Make Projects-2020, Kumar said that the industry should stand up to the needs of the Army, both in terms of quality as well as quantity and be pricing competitively. “We want to Make for India and for the world. We also want you to export and the government will stand side by side with the industry to promote exports,” he assured. Vice Chief of the Army Staff, Indian Army, Lt Gen S.K.Saini is of the view that the Indian defence industry has radically changed in the last few years and it can emerge as a global hub of defence equipment. “It will always be an honour for us to fight and win wars with equipment Made in India and made by Indians.” The Indian Army is giving impetus to promote MSMEs and small-scale industries to become part of the defence production.

It may be noted that the Prime Minister Narendra Modi in his address to the Nation on May 12had given a call for a self-reliant India based on the five pillars-Economy, Infrastructure, System, Demography & Demand and announced a special economic package for Self-Reliant India called ‘Atmanirbhar Bharat’. Taking a cue from that evocation, the Department of Military Affairs (DMA), Ministry of Defence (MoD) had prepared a list of 101 items for which there would be an embargo on the import beyond the timeline indicated against them. This is a big step towards self-reliance in defence. It also offers a great opportunity to the Indian defence industry to rise to the occasion to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by Defence Research and Development Organization (DRDO) to meet the requirements of the Armed Forces in the coming years.

The list has been prepared by MoD after several rounds of consultations with all stakeholders, including Army, Air Force, Navy, DRDO, Defence Public Sector Undertakings (DPSUs), Ordnance Factory Board (OFB) and private industry to assess current and future capabilities of the Indian industry for manufacturing various ammunition/weapons/platforms/equipment within India. Almost 260 schemes of such items were contracted by the Tri-Services at an approximate cost of 3.5 lakh crore between April 2015 and August 2020. With the latest embargo on import of 101 items, it is estimated that contracts worth almost four lakh crore will be placed upon the domestic industry within the next five to seven years. Of these, items worth almost 1, 30,000 crore each are anticipated for the Army and the Air Force while items worth almost 1,40,000 crore are anticipated by the Navy over the same period.

The list of 101 embargoed items comprises of not just simple parts but also some high technology weapon systems like artillery guns, assault rifles, corvettes, sonar systems, transport aircrafts, light combat helicopters (LCHs), radars and many other items to fulfil the needs of our Defence Services. The list also includes, wheeled armoured fighting vehicles (AFVs) with indicative import embargo date of December 2021, of which the Army is expected to contract almost 200 at an approximate cost of over 5,000 crore. Similarly, the Navy is likely to place demands for submarines with indicative import embargo date of December 2021, of which it expects to contract about six at an approximate cost of almost 42,000 crore. For the Air Force, it is decided to enlist the light combat aircraft TEJAS Mk-1A with an indicative embargo date of December 2020. Of these, 123 are anticipated at an approximate cost of over 85,000 crore. Hence, there are highly complex platforms that are included in the list of 101 items, of which details of three examples are given above. The embargo on imports is planned to be progressively implemented between 2020 to 2024. The aim behind promulgation of the list is to apprise the Indian defence industry about the anticipated requirements of the Armed Forces so that they are better prepared to realize the goal of indigenization. The MoD has adopted many progressive measures to encourage and facilitate ‘Ease of Doing Business’ by the defence Production entities. The government is planning all necessary steps to ensure that timelines for production of equipment as per the Negative Import List are met, which will include a coordinated mechanism for hand holding of the industry by the Defence Services. More such equipment for import embargo would be identified progressively by the DMA in consultation with all stakeholders in near future. In another related step, the MoD has bifurcated the capital procurement budget for 2020-21 between domestic and foreign capital procurement routes. A separate budget head has been created with an outlay of nearly 52,000 crore for domestic capital procurement in the current financial year. Indeed a boost for domestic industry and a step to propel “Atamnirbhar Bharat” or self reliant India.