Defence Ministry released Third Positive Indigenisation List

A list of 101 items has been released by Defence Ministry as part of Third Positive indigenisation which comprises major equipment for defence sector. The first Negative Indigenisation list was released in August 2020 which has 101 items and later in June 2021 a second list of indigenisation items was comprising of 101 where released.

What is a Third List and its Significance?

The third list  consists of highly complex systems, sensors, weapons, and ammunitions viz. Mounted arty Fun systems, Light Weight Tanks, Next-generation offshore patrol vessels (NGOPV), etc. These weapons and platforms are planned with effect from December 2022 to December 2027.

As par of indigensation all these items will be procured locally as per the  DAP (Defense Acquisition Procedure) 2020. According to DAP 2020 items procurement has to be done for Indigenously Designed Developed and Manufactured items or Globally available items have to be Manufactured in India. 

Significance

1. Domestic Industry Promotion. This will help in promoting domestic industry and developing R & D and manufacturing in India.
2. Fiscal Deficit. One more important benefit is by reducing Fiscal Deficit and also the generation of employment along with the strong sense of integrity and sovereignty among the Armed forces along with enchasing nationalism and patriotism. 
3. Government has been emphasizing self-reliance in defence manufacturing for a long time. Towards the attainment of this goal DRDO (Defense Research Development Organisation), Defense Public Sector Undertakings (DPSUs), and other private players have been encouraged in the development and production of defence equipment within the country.  
4. Since India is one of the world’s largest arms importers, indigenisation will help in reducing the overall national savings. Current estimates predict that India will be spending around 130 billion dollars in the next five years on the procurement of arms and equipment for the armed forces.

Factors for Indigenisation

1. India has been over-dependent on other countries for procurement of defence items for long on the Soviet Union, France, Israel, and the USA. 
2. Large scales purchases are affecting our economy.
3. Recent success in various defence research fields has boosted our morale and also elevated India’s status in the International market.
4. With Indigenisation, we can also be a major defense exporter, thereby increasing the revenue of the nation.

Challenges ahead

1. Lack of intuitional capacity and capabilities to take different policies.
2. Heavy cost in establishing firms restricts entry of new players in defence manufacturing and production.
3. Policy dilemma offset requirements under the DPP (Defence Procurement Policy, now replaced with DAP 2020) didn’t help achieve its goal till now.
4. According to DAP 2020, all other international deals that are competitive, and have multiple vendors vying for it, will continue to have a 30% offset clause.

Initiatives

1. Increased the FDI limit: In May 2020, the Foreign Direct Investment (FDI) limit under the automatic route in the defence sector was hiked from 49% to 74%.
2. Corporatization of the Ordnance Factory Boards: In October 2021, the government dissolved the four-decade-old Ordnance Factory Board (OFB) and amalgamated 41 factories under seven new state-owned companies to manufacture defence hardware ranging from munitions to heavy weapons and vehicles.
3. Defence India Startup Challenge (DISC): DISC aims at supporting Startups / Micro, Small and Medium Enterprises (MSMEs)/Innovators to create prototypes and/or commercialize products/solutions in the area of National Defence and Security. It has been launched by the Ministry of Defence in partnership with Atal Innovation Mission.
4. SRIJAN Portal: It is a one-stop shop online portal that provides access to the vendors to take up items for indigenization.
5. E-Biz Portal: The process of applying for an Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) has been made completely online on ebiz portal.

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