Government of India introduced the scheme of ‘Make in India’ in 2015 and has been promoting this scheme in all sorts of ways. The latest being the defense industry. The Government has announced that it plans on promoting production of local defense instruments by using offers such as capex and R&D subsidy, tax exemptions, cheaper finances and only one stop shops for clearances amongst others. The Government plans on coming up with other lucrative offers to attract foreign investors for manufacturing defense armaments and other instruments. This proposal is considered to be a part of the draft industrial policy which seeks to boost the manufacturing sector in our nation.
The need for stronger defense sector was highlighted by the recent border stand-off India had with China. Department of Promotion of Industry and Internal Trade (DPIIT) had suggested to the Government to freeze any changes to the Defense Procurement Policy for the next 5 years so as to instil a sense of confidence in industry to attract long-term investments.
According to reports, the defense industry only accounts for 12% of the Government expenditure. While a few argue that it should be more, a few believe it to be sufficient. In the previous financial year, India spent nearly $64 billion on the defense industry and during this time India’s arms import accounted for 15% global arms import.
The Government has reportedly increased the foreign direct investment (FDI) limit by 25% to make it 74% now just to push long-term investment in the defense sector. The new policy stresses on manufacturing and development of large and complex systems that are currently imported. It also focuses on futuristic technology and its use in the defense sector. It also focuses on reducing and limiting dependence on imported foreign sources for systems and components which are used in the defense sector. The policy also advises the Ministry of Defense to increase expenditure on defense R&D and to involve private sectors in the industry. This would invite open competitive bidding. Defense industry has grown over the years, but it must keep growing in order to make India a superpower and in order to prevent any other superpower to try and bully it.
