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MoD releases draft Defence Production and Export Promotion Policy 2020; aimed at $5 bn export by 2025

Draft Defence Production & Export Promotion PolicyOn August 3, 2020, the Ministry of Defence (MoD) publicized a draft ‘Defence Production & Export Promotion Policy (DPEPP) 2020 for public feedback by August 17, 2020 after which the policy would be promulgated by the MoD. The policy aims to achieve a manufacturing turnover of $25 bn or Rs 1,75,000 crore, including exports of $5 bn or Rs 35,000 Crore in aerospace and defence goods and services by 2025.

  • The DPEPP 2020 is MoD’s overarching guiding document for providing significant thrust to defence production for self-reliance and exports.
  • The Department of Defence Production (DDP) will be the nodal department for coordination on various components of the DPEPP 2020 and to achieve the objectives set in this Policy.
  • It is to be noted that currently the size of the Defence Industry, including Aerospace and Naval Shipbuilding Industry, is estimated to be about Rs 80,000 Cr (2019-20). In this the contribution of Public Sector is estimated to be Rs 63,000 crores, while the share of Private Sector is Rs 17,000 crores.

Focus areas of DPEPP 2020: 

Procurement Reforms, Indigenization & Support to MSMEs/Startups, Optimize Resource Allocation, Investment Promotion, FDI & Ease of Doing Business, Innovation and Research & Development (R&D), DPSUs and OFB, Quality Assurance & Testing Infrastructure & Export Promotion

Key Points from Policy:

-To develop a dynamic, robust and competitive Defence industry, including Aerospace and Naval Shipbuilding industry to cater to the needs of Armed forces with quality products.

-To reduce dependence on imports through domestic design and development on the lines of “Make in India” initiatives.

  • 5,000 items are proposed to be indigenized by 2025.

-To promote export of defence products and become part of the global defence value chains. 

  • In this regard, the Defence Attaches have been mandated and are supported to promote export of indigenous defence equipment abroad.

-To create an environment that encourages R&D, rewards innovation, creates Indian IP (intellectual property) ownership and promotes self-reliant defence industry.

– To set up a Project Management Unit (PMU) with representation from the Services for estimation of development and production.

-To create Technology Assessment Cell (TAC) with the aim to move away from licensed production to design, develop and produce indigenously for the systems projected in Long Term Integrated Perspective Plan (LTIPP) of the Services.

Innovations for Defence Excellence (iDEX), that has been operationalized to provide incubation and infrastructure support to the startups in the defence area, would be further scaled up to engage 300 more startups and develop 60 new technologies/ products during the next 5 years. 

Mission Raksha Gyan Shakti which was launched to promote innovation and technology development and file greater number of patents in Defence PSUs (public sector undertakings) and OFB (ordnance factory board) would be scaled up further to promote creation of IP Property in defence sector. 

Currently, FDI policy for Defence sector, FDI was allowed under automatic route up to 49% and above 49% through government route. Efforts would be made to attract FDI through Invest India and Defence Investor cell.

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About Ministry of Defence (MoD):
Union Minister– Rajnath Singh
Minister of State (MoS)– Shripad Yesso Naik