Self-reliance did not mean working in isolation from the rest of the world, but working in the country itself with their active participation and support, Defence Minister Rajnath Singh said on Thursday after formally releasing the third positive indigenisation list of 101 equipment and platforms, which the Services have to procure only from the domestic industry.

At the event, the Defence Research and Development Organisation (DRDO) handed over 30 Transfer of Technology (ToT) agreements to 25 Indian industries for transfer of 21 technologies developed by 16 DRDO labs across the country.

“The release of this list shows the fast pace of our self-reliance in the defence sector. This list is planned to be implemented from December 2022 till December 2027,” Mr. Singh said.

The DRDO stated that so far it had entered into more than 1430 ToT agreements with industries all over the country, out of which, 450 have been signed in the last two years. 

One of the big ticket items on the list is naval utility helicopters, the procurement for which was to be processed through the Strategic Partnership route and has been hanging fire for over couple of years now. It now looks like to be going to Hindustan Aeronautics Limited. 

Big systems in list

Other big systems in the list include sensors, weapons and ammunitions, rockets, patrol vessels, anti-ship missile, anti-radiation missile and several others which, Mr. Singh said, would fulfill the requirements of the armed forces.

Underscoring the important of self-reliance, he observed, “We were denied access to knowledge of space technology and rocket science but the effort and dedication of our rocket scientists has placed us in the forefront in space domain and missile capability. Today we have been successful in reaching Mars.”

As part of efforts to boost the domestic defence industry and promote defence exports, in August 2020, the government notified the first negative import list of 101 items and in May this year notified the second one, comprising 108 items, and renamed the third one as ‘positive indigenisation list’. The items on the lists cannot be imported by the Services and should be sourced from within the country.

Since the announcement of the lists, contracts worth ₹54,000 crore have been signed for domestic procurement and orders worth ₹4.5 lakh crore were expected to be placed in the next 5 to 7 years, Mr. Singh stated.

Strategically important time

S. P. Shukla, president, Society of Indian Defence Manufacturers, said, the third list came at a strategically important time. “Given the current geopolitical scenario, the importance of being self-reliant in defence production is more apparent than ever and the Industry is well poised to manufacture the 101 items indigenously and enhance the operational readiness of our forces.”

In addition, a percentage of the capital outlay of the Defence budget had been reserved for procurement from the domestic industry. For the year 2021-22, about 63% of the capital outlay or about ₹70,221 crore was reserved for procurement from domestic defence industry.

Of the ₹1.52 lakh crore capital allocation in this year’s Defence budget, which was meant for new purchases and payments for past procurements, 68%  which was ₹84,598 crore from the allocation for the three Services  had been reserved for procurement from the domestic industry.

Nirmala’s announcement

Union Finance Minister Nirmala Sitharaman had announced in her Budget speech that in the annual Budget of 2022-23, Defence R&D will be opened up for industry, start-ups and academia and 25% of the Defence R&D budget has also been earmarked for this purpose. In addition, she announced that an independent nodal umbrella body will be set up for meeting wide-ranging testing and certification requirements.

These measures were meant to incentivise the private sector to invest in defence manufacturing, which would also build competition for the Defence Public Sector Undertakings (DPSU) improving their efficiency. In this direction, the government recently corporatised the Ordnance Factory Board and converted it into seven DPSUs.