Painting a mixed picture of defence exports and imports, the defence ministry told Parliament on Monday that foreign procurement in defence has risen to Rs 50,061 crore in 2021-22 from Rs 37,030 crore in 2017-18.
Meanwhile, defence and aerospace exports have risen to Rs 12,815 crore from Rs 4,682 crore during the same period.
Improvements in innovation
The ministry told Parliament on Monday that there has been good progress in the innovation ecosystem for defence, titled “Innovations for Defence Excellence” or (iDEX).
The iDEX scheme was launched in April 2018 to foster innovation and technology development in defence and aerospace by engaging industries including medium, small, and micro enterprises (MSMEs), start-ups, individual innovators, research and development (R&D) institutes, and academia.
“Under iDEX, 233 problems have been opened, 310 start-ups engaged, 140 contracts signed,” stated the defence ministry.
In addition, an “iDEX Prime” framework has been launched under iDEX in 2022 to support start-ups with grants-in-aid up to Rs 10 crore, to enable the development of high-end solutions, stated the defence ministry in a written reply.
“Till October 2022, a total of 595 industrial licences have been issued to 366 companies operating in the defence sector,” stated the MoD.
On Friday, the MoD had stated in reply to a question on indigenisation: “The value of indigenous defence production for financial years 2020-2021 and 2021-2022 are Rs 84,643 crore and Rs 94,846 crore, respectively.”
“To achieve Aatmanirbharta (self-reliance) and realise the goal of “Make in India,” the MoD cited the establishment of two Defence Industrial Corridors (DICs) – one in Uttar Pradesh and other in Tamil Nadu.
Six nodes – Agra, Aligarh, Chitrakoot, Jhansi, Kanpur, and Lucknow – have been identified for developing the Uttar Pradesh Defence Industrial Corridor (UPDIC), stated the MoD.
Similarly, five nodes – Chennai, Coimbatore, Hosur, Salem, and Tiruchirappalli — have been identified for developing the Tamil Nadu Defence Industrial Corridor (TNDIC).
According to the Uttar Pradesh (UP) government, 105 Memoranda of Understanding (MoUs) have been signed with industries, worth potential investments of Rs 12,139 crore. Already, Rs 2,422 crore have been invested in UPDIC.
Total 1,608 hectares of land have been acquired for development of UPDIC.
Meanwhile, the Tamil Nadu government says arrangements have been made through MoUs, etc. for potential investment of Rs 11,794 crore by 53 industries. Already, Rs 3,847 crore have been invested in TNDIC.
Total 910 hectares of land has been acquired for development of TNDIC.
Ordnance Factory Board
Seven new defence public sector undertakings (DPSUs) carved out of the erstwhile Ordnance Factory Board (OFB) have been incorporated as government companies (wholly owned by the central government) under the Companies Act 2013 in October 2021.
The MoD stated in Parliament on Friday that the government has taken steps to handhold and support these new defence companies. For this, the OFB’s outstanding indents were grandfathered and converted into deemed contracts valuing about Rs 70,776 crore for the next five years.
These deemed contracts provide annual targets for delivery of products. Every year, 60 per cent of the amount pertaining to that year’s target would be paid by the Services to the new DPSUs as advance as per terms and conditions stipulated in the deemed contract.
Defence public sector undertakings
The advances provide working capital to the new DPSUs for widening their customer base, including exports to augment the volume of defence production.
The DPSUs are pursuing export opportunities through interaction with Defence Attaches at Indian embassies and missions abroad.